U.S. stocks ended lower on Thursday after data showed that consumer price inflation hit a fresh 40-year high cementing expectations that the Fed would hike interest rates by the end of the its monetary policy meeting next week. Investors’ sentiment also got dented after yet another round of diplomatic talks between Ukraine and Russia reached a stalemate. All the three major indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.3% or 112.18 points to end at 33,174.07 points.
The S&P 500 declined 0.4% or 18.36 points to finish at 4,259.52 points. Tech stocks were the biggest losers, while some of the losses were pared by energy stocks.
The Technology Select Sector SPDR (XLK) lost 1.8%, while the Energy Select Sector SPDR (XLE) gained 3.1%. Six of the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq shed 0.9% or 125.28 points to close at 13,129.96 points.
The fear-gauge CBOE Volatility Index (VIX) was down 6.84% to 30.23. A total of 12.50 billion shares were traded on Thursday, lower than the last 20-session average of 13.65 billion. Decliners outnumbered advancers on the NYSE by a 1.62-to-1 ratio. On Nasdaq, a 1.72-to-1 ratio favored declining issues.
Inflation Data Worries Investors
After bouncing back from its week’s lows on Wednesday, stocks once again resumed their slide on Thursday, with investors now waiting for Fed to announce the first of its multiple rate hikes next week. On Thursday, investors’ confidence once again got dented as data showed that consumer price inflation in the United States hit a fresh four-decade high.
This cemented expectations that the Fed would most likely announce its first interest rate hike for the year by the conclusion of its policy meeting next week. Rising interest rates have already been taking a toll on markets form the beginning of this year and Thursday was no different.
This saw the 10-year Treasury yield reaching more than 2% for the first since Feb 25. Growth stocks, mainly tech stocks, were the biggest sufferers on Thursday. Shares of Meta Platforms, Inc.
FB
, Microsoft Corporation
MSFT
and Apple Inc.
AAPL
declined 1.7%, 1% and 2.7%, respectively. Apple has a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Geopolitical Tensions Raise Worries
Investors’ confidence got dented once again after a fresh round of peace talks between and Ukraine ended in a stalemate. Investors had expected that the two warring nations would reach a peace deal after Zelensky on Wednesday said that he was no longer pushing for NATO membership and was ready for a diplomatic solution to the ongoing war.
However, the talks didn’t turn out to be fruitful. Oil and energy prices had been on the rise ever since war broke out between Russia and Ukraine. However, on Wednesday crude oil prices pulled back from their earlier highs after suffering their biggest single-day percentage loss in almost two years. On Thursday, crude oil futures fell further.
However, other commodities that were on a rally since Russia invaded Ukraine, were higher again on Thursday after pulling back the day earlier. Silver and gold both rose on Thursday, as investors continued to worry that higher prices could slow down economic growth.
Energy stocks, despite Thursday decline in crude oil price, rallied. Shares of Exxon Mobil Corporation
XOM
gained 3.1%, while Chevron Corporation
CVX
rose 2.7%.
Economic Data
Data released on Thursday showed that U.S. consumer price rose 7.9% in February to hit a new 40-year high. This was also marginally higher than economists’ expectations of 7.8%. On a month-over-month basis CPI increased 0.8%, higher than expectations of 0.7%.
The Labor Department said on Thursday that initial jobless claims increased to 227,000, increasing 11,000 for the week ending Mar 5. The four-week moving average also increased to 231,250, an increase of 500 from the previous week’s revised average of 230,750.
Continuing claims came in at 1,494,000, increasing 25,000 from previous week’s revised level. The previous week’s numbers were revised down by 7,000 from 1,476,000 to 1,469,000. The 4-week moving average came in at 1,506,500, a decrease of 31,250 from the previous week’s revised average.
Just Released: Zacks Top 10 Stocks for 2022
In addition to the investment ideas discussed above, would you like to know about our 10 top picks for the entirety of 2022?
From inception in 2012 through 2021, the
Zacks Top 10 Stocks
portfolios gained an impressive +1,001.2% versus the S&P 500’s +348.7%. Now our Director of Research has combed through 4,000 companies covered by the Zacks Rank and has handpicked the best 10 tickers to buy and hold. Don’t miss your chance to get in…because the sooner you do, the more upside you stand to grab.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report