Tuesday, May 10, 2022

DJIA: 32,160.74, down 84.96
S&P 500: 4,001.05, up 9.81
Nasdaq: 11,737.67, up 114.42

Stocks fluctuate, yields dip before CPI report

U.S. stocks fluctuated on Tuesday as investors digested the latest remarks from Federal Reserve (Fed) officials and awaited an update on the consumer price index (CPI) tomorrow. The S&P 500 added 0.3%, snapping a three-day losing streak that sent the index below the 4,000 level for the first time since March 2021. The Dow fell 84 points, while the Nasdaq Composite jumped 1% as investors seemed to buy the dip in tech stocks. Yesterday, the major averages notched their worst three-day rout since September 2020 as Wall Street grapples with an uncertain economic outlook amid elevated inflation.

A slight reprieve in the back-up in Treasury yields helped buoy the mood. The yield on the 10-year note slipped four basis points (0.04%) to 2.99% after having touched 3.20% intraday on Monday. Still, the benchmark rate remains 1.48% higher year-to-date. In central bank news, New York Fed President Williams admitted that tighter monetary policy could result in somewhat higher unemployment. Separately, Cleveland Fed President Mester said she was comfortable with several more 0.50% rate increases, while an even larger 0.75% hike may not be ruled out in perpetuity. On the data front, a measure of small business optimism steadied in April.

Seven of 11 S&P 500 sectors finished in negative territory, with Real Estate and Utilities lagging. Information Technology stocks outperformed amid strength in chipmakers. In earnings, Peloton Interactive Inc. slid 8.7% on a wider-than-forecasted quarterly loss and weak guidance. Elsewhere, Biohaven Pharmaceutical Holding Company Ltd. soared 68.4% after agreeing to be acquired by Pfizer Inc. for $11.6 billion.

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