Shares of Wall Street fell sharply, and yields on treasury bills fell in an volatile session on Wednesday as oil prices rose and investors worried about the possibility of an economic downturn.
U.S. stock indexes rose higher and lower during the session as investors selected data on U.S. inflation in search of clues as to how to raise the Federal Reserve rate.
U.S. data showed higher-than-expected core inflation, excluding items such as oil prices.
Some investors were encouraged by the annual change in consumer prices to 8.3% in April from 8.5% in March, although this was above analysts’ estimates of 8.1%.
While some investors have been encouraged to improve over the same period last year, others have noted that inflation is still hot and that this has been highlighted by the oil futures rally. “It’s all about recession concerns.
The inflation figures we received this morning were not good, worse than expected … High food prices and growing concerns that inflation figures will remain high, ”said Tim Grisky, senior portfolio strategist at Ingalls & Snyder. .
The strategist also pointed to smoothing the yield curve, citing the difference between the long-term and short-term yields of Treasury bonds as a sinister sign.
“We have a very flat yield curve that flirts with inversion. This scares traders about the prospects of the recession. There are too many investors who believe the Fed can create a soft landing. It looks more and more dubious. “
The Dow Jones Industrial Average fell 326.63 points, or 1.02%, to 31,834.11, the S&P 500 lost 65.87 points, or 1.65%, to 3,935.18, and the Nasdaq Composite fell 373, 41 points, or up to 3,6,4,4
S&P closed at its lowest level since March 25, 2021 and 18% below the record of January 3.
Nasdaq lagged sharply behind its counterparts as interest-sensitive growth sectors, technology and discretionary consumers found themselves lower than the rest of the market, also closing more than 3%.
MSCI shares worldwide fell 0.88%, the lowest close since November 2020.
Earlier, Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis, took a half-hearted view, pointing out that inflation, while still high, seems to be starting to decline.
“After all, we may be thrilled whether it’s a little higher or a little lower, but it’s clear that annual inflation has turned upside down and seems to have peaked in March. It seems that they have turned a corner, ”he said.
The US dollar initially strengthened after news of inflation, then declined, but rose slightly in late trading.
The dollar index, which measures the dollar against a basket of major currencies, was 0.067%, the euro fell 0.13% to 1.0513 dollars.
The Japanese yen strengthened 0.35% against the dollar to 129.97 per dollar, while the sterling last traded at $ 1.2245, down 0.62% per day. At the beginning of the trade, the yield on 10-year Treasury bonds fell to its lowest level in a week.
But after inflation, yields rose again to a three-year high of 3.203%, which was reached on Monday before falling again.
The last time on Monday the yield on 10-year bonds rose 20/32 to 2.9148% from 2.993% on Monday.
The 30-year bond last rose 57/32 to a yield of 3.026% from 3.129%, while the 2-year bond last fell 1/32 to a yield of 2.6371% from 2.623%.
“The volatility of all markets is really something, a whipping aspect of the day,” said Lou Brian, market strategist at DRW Trading. “You see some kind of security escape and maybe the idea that even with today’s CPI we’re breaking the curve.”
Oil prices rose on Wednesday after Russian gas flows to Europe declined and Russia imposed sanctions on some European gas companies, adding to uncertainty in global energy markets.
US crude oil futures rose to $ 105.71 a barrel, up $ 5.95 or 5.96%, while Brent oil futures were set at $ 107.51 a barrel. , an increase of $ 5.05 or 4.93%.
Spot gold added 0.8% to $ 1,852.79 an ounce.