US stocks ended the day sharply in the red Wednesday, after the government’s April inflation numbers showed bigger price increases than expected.
The Dow finished nearly 2%, or 682 points, lower, marking its worst performance since January. The Dow has lost about 1,200 points this week.
The S&P 500 closed down 2.1% in its worst day since February.
The Nasdaq Composite fell the most – down 2.7% – its worst day since March.
With just about half an hour left in the trading day, investors are bracing for one of the stock market’s the worst days this year.
The Dow — off by 1.9%, or nearly 660 points — is on track for its worst day since January.
The broader S&P 500 is down 2.1% and on pace for its worst day since February.
The Nasdaq Composite has dipped the most, down 2.7%, putting it on track for its worst performance since March.
Oof.
The market is in the red after this morning’s higher-than-expected inflation numbers. But not all investors are losing their minds over rising consumer prices.
“This was a number that we expected,” said Kristen Bitterly, regional head of investments for North America at Citi Private Bank. And it won’t be the last moderately higher inflation print this summer either.
“We think that the market is overestimating the medium-term impact of inflation and underestimating the global recovery,” Bitterly said on CNN Business digital live show Markets Now.
Bitterly recommends looking for quality companies outside the US to add to investors’ portfolios to protect against both the volatility and rising rates environment. She sees the 10-year US Treasury yield at 2% at year-end compared with 1.68% today.
“You should expect volatility… so don’t try to time this market,” she added. “Don’t fear volatility. Exploit it and expect it in a market like this.”
With more jabs in arms, employers and employees are planning for a return to the office over the summer.
“There a very wide range of perspectives of that the post-pandemic future of work will look like,” according to EY US CEO Kelly Grier.
Company heads are thinking about how prolonged remote work might affect businesses, productivity and employees from a culture, innovation, diversity, inclusion and belonging point of view.
Hybrid models might work for some, but it will depend on sectors in question, Grier told Alison Kosik on the CNN Business digital live show Markets Now.
By the end of May over 90% of EY offices will be open again and “we are seeing people return to the office,” Grier said.
“We will also be among the companies that takes advantage of the flexibility about where and how we work,” Grier said.
We’re in the weeds of the recovery and that means a lot of data that doesn’t always make sense.
Last months’ jobs report was a big miss, showing just 266,000 jobs added to the economy, when analysts expected nearly a million, for example. But it’s too soon to tell whether the report was a one-off or the start of a trend.
“There’s a lot of volatility month to month. There’s a strong demand in a lot of sectors,” said Jed Kolko, chief economist at Indeed, on CNN Business’ Markets Now live show.
Yet, some employers say they just can’t find staff. It’s hard to tell why some people are staying at home, Kolko said.
“Many people are still saying that their unemployment is temporary,” he added. “And many people are still struggling with the closure of schools and day cares.” On top of that, the pandemic continues to represent a risk for people.
And it might not even be possible to tell in hindsight what kept people from returning to work, because the expanded pandemic benefits expire around the time of the next school year starting, when more schools should return in person.
Stocks are once again, to quote Mick Jagger, like tumbling dice. A bigger-than-forecast jump in consumer prices is clearly making investors antsy. The CNN Business Fear & Greed Index fell into “fear” territory Wednesday for the first time since March.
Three of the seven gauges of market sentiment that the index tracks were registering levels of “Extreme Fear” — including indicators of demand for safe haven bonds and bearish put options, as well as the VIX (VIX), which measures market volatility and surged 20% Wednesday.
The index was showing signs of Extreme Greed as recently as December, as hopes about more stimulus from the incoming Biden administration and plans to distribute more Covid-19 vaccines lifted Wall Street’s spirits.
But there are now concerns that the market and economy may have gotten a little too hot too quickly. Investors are worried about inflation following the CPI report. It’s not helping that wages are growing rapidly, further fueling inflation fears.
There are also numerous stories about consumers facing big price spikes due to numerous supply shortages for goods ranging from ketchup and chicken to chlorine and gasoline.
Add that up and you have a classic market panic. Even though earnings for the first quarter were strong and companies are bullish about the rest of the year, there are concerns that inflation pressures will force the Federal Reserve to raise interest rates, which have been hovering near zero since March 2020, sooner rather than later.
Stocks are deep in the red at midday, with the Dow tumbling more than 400 points by lunchtime.
The other indexes aren’t looking so hot either — especially the tech-heavy Nasdaq Composite, which has been extra sensitive to Wall Street’s inflation fears over the past months.
This morning’s consumer price inflation report showed prices rose more than expected in April, refreshing investor worries over a potential end to the Federal Reserve’s loose money policy sooner than hoped.
The Dow fell 437 points, or 1.3%, around midday.
The S&P 500 was down 1.6% and the Nasdaq Composite declined 2.2%.
US stocks added onto their losses from the start of the week and opened in the red Wednesday.
The Dow opened 0.4%, or 144 points, lower. The broader S&P 500 fell 0.7%, while the Nasdaq Composite opened down 1.3%.
Economic data ahead of the opening bell showed that US consumer price inflation was higher than economists had predicted in April. Prices are rising all over the place as the economy is reopening and Americans are going out to spend again. Moreover, supply chain issues, raw material price jumps and shortages are driving inflation up further.
Just about everything is getting more expensive in the United States as the stimulus-fueled economy rebounds, sending Americans back to shops and restaurants. But the pandemic is far from over, and supply-chain woes mean supply isn’t meeting demand – sending prices even higher.
US consumer prices in April increased 4.2% from a year earlier, more than the 3.6% economists had predicted, the Bureau of Labor Statistics reported Wednesday. It was the biggest 12-month increase since September 2008.
Prices rose 0.8% on a seasonally adjusted basis between March and April – also more than analysts had expected.
Price increases, supply chain problems and shortages have become hot-button issues for the global economy as it recovers from the pandemic shock of 2020. Higher inflation was expected as the economy began to reopen. The Federal Reserve, whose mandate it is to keep prices stable, continuously said that moderately higher prices this summer will be temporary.
The Securities and Exchange Commission has yet to approve any exchange-traded funds that own only bitcoin and other cryptocurrencies, though several top companies — including Fidelity, VanEck, Anthony Scaramucci’s SkyBridge and Bitwise — have applied to register such funds.
But Bitwise announced Wednesday that another of its funds, the Bitwise Crypto Industry Innovators ETF, has received the SEC go-ahead. It will trade under the ticker symbol “BITQ.”
That’s because it invests not in bitcoin directly, but rather in an index of so-called “picks and shovels” companies that have businesses tied to bitcoin (XBT) and other cryptos like ethereum and, yes, dogecoin.
So no, the new Bitwise fund isn’t not the long-awaited first bitcoin ETF — but it’s significant because it’s the first ETF to have crypto in its name.
(There are several other blockchain-themed ETFs but they have names that don’t scream crypto, such as the Amplify Transformational Data Sharing ETF (BLOK).)
The Bitwise fund’s holdings will include newly public Coinbase (COIN), payments giants Square (SQ) and PayPal (PYPL), bitcoin bank Silvergate (SI) and Galaxy Digital (BRPHF), the cryptocurrency investing firm run by bitcoin bull Mike Novogratz.
Bitwise Asset Management CEO Hunter Horsley said he’s hopeful the SEC is closer to finally approving an actual bitcoin ETF that owns digital coins. After all, the Winklevoss twins of Facebook fame first filed for one (that was rejected) way back in 2013.
“The bitcoin ETF journey has been almost a decade long,” Horsley said. “But I think it will be possible. This is a big milestone for us.”
Investors are growing increasingly concerned about raw material price spikes, shortages and inflation, pointing to another down day. Yesterday, the Dow briefly tumbled more than 600 points.
Here’s where things stand as of 6:15 am ET:
A growing number of gas stations along the East Coast are without fuel as nervous drivers aggressively fill up their tanks following a ransomware attack that shut down the Colonial Pipeline, a critical artery for gasoline.
The panic-buying threatens to exacerbate the supply shock.
As of 9 pm ET Tuesday, 12.3% of gas stations in North Carolina and 8.6% in Virginia didn’t have gasoline, according to outage figures reported by GasBuddy, an app that tracks fuel prices and demand. The Virginia figure was up from 7.7% at 4p ET, while North Carolina was up from 8.5% previously.
