Thursday, May 05, 2022

DJIA: 32,997.97, down 1063.09
S&P 500: 4,146.87, down 153.30
Nasdaq: 12,317.69, down 647.17

Stocks tumble, erasing post-Fed meeting rally

U.S. stocks staged a sharp reversal on Thursday, negating yesterday’s post-Federal Reserve (Fed) relief rally. Risk sentiment waned as investors deliberated a confluence of economic risks in the midst of the most aggressive Fed tightening cycle in 22 years. On Wednesday, the U.S. central bank announced the first 50-basis point (0.50%) rate hike since 2000 and signaled further increases of similar magnitude in the coming months as officials prioritize lowering inflation.

The Nasdaq Composite plunged 5.0% to cap its biggest one-day drawdown in nearly two years as growth-related shares led the downturn. The Dow tumbled 1063 points, suffering its worst day since October 2020. The S&P 500 retreated 3.6%, with all 11 sectors falling more than 1%. The Consumer Discretionary sector lagged with a 5.8% drawdown as soft forward guidance from both Etsy Inc. and eBay Inc. pressured other ecommerce companies. Treasuries resumed their rout, with the 10-year note yield climbing six basis points (0.06%) to 3.03%, a peak not seen since November 2018.

Economic updates also dented the mood. A gauge of U.S. productivity dropped by the biggest margin since 1947 (-7.5%) during the first quarter as economic activity contracted. Meanwhile, 30-year fixed mortgage rates spiked to the highest level since August 2009 (+5.27%). Overseas, an update showed China’s services activity shrank in April at the fastest pace in more than two years. Elsewhere, the Bank of England announced its fourth consecutive rate hike. The British pound tumbled 2.1% versus the U.S. dollar, sending the greenback up 0.9% against a basket of its peers.

Read more about it here.