It was a very bearish trading week for U.S. stocks as the major indexes have returned to losing ways after they ended a very long losing streak two weeks ago.
The New York Stock Exchange (NYSE) All Share Index (ASI) lost 4.43% for the week, on the back of losing 0.91% in the preceding week. The NYSE is now on a two-week losing streak. It opened, trading at 15,848.5 basis points and it closed the week trading at 15,096.7 basis points. Of the five trading sessions seen during the week, the NYSE posted gains for the first two trading sessions of the week, with the bears dominating the market in the last three.
The NASDAQ also ended bearish as it posted losses of 5.60% during the week under consideration. It started at a basis point of 12,203.18 and ended the week at 11,340.02 basis points. The week in question saw a decrease in the volume of transactions against the previous week by 76.23% as the market recorded a volume of 1.06 billion.
The Dow Jones and the S&P 500 also posted losses of 4.58% and 5.06% respectively. Both have returned back to losing ways after ending a record-long losing streak.
What’s moving the market?
The stock market closed the week on a sour note after U.S. inflation accelerated to a fresh 40-year high. Major indexes posted their biggest weekly percentage declines since January and ended sharply lower on the day Friday. The U.S. Labor Department’s report showed the consumer price index (CPI) increased 1.0% last month after gaining 0.3% in April. Economists polled by Reuters had forecast the monthly CPI picking up 0.7%. year-on-year, CPI surged 8.6%, its biggest gain since 1981 and following an 8.3% jump in May.
Specifically, Friday’s selloff was broad, with all 30 Dow stocks closing lower and decliners outnumbering advancers on the New York Stock Exchange by 8 to 1. The hot inflation numbers have sparked heightened concerns about a recession and more aggressive interest rate policy from the Federal Reserve starting at next week’s meeting. The 2-year Treasury yield, considered highly sensitive to Fed rate hikes, spiked 22 basis points to 3.04%, its highest level since 2008.
On the inflation data, Jason Pride, the chief investment officer for private wealth at Glenmede stated, “Today’s report should extinguish any pretense that a ‘pause’ in rate hikes will likely be appropriate by the end of summer, as the Fed is clearly still behind the eight ball on bringing inflation under control.”
The U.S. SEC said it would consider some changes to stock-market rules that would make trading firms directly compete to execute trades from retail investors. Some of the proposals were outlined on Wednesday as Chairman Gary Gensler took the stage at the Piper Sandler Global Exchange Conference. Closely watching the speech were online brokers like Robinhood, TD Ameritrade and E*TRADE, as well as the New York Stock Exchange and Nasdaq.
Making waves in the short-term financing industry, Apple, unveiled a BNPL service during its Worldwide Developers Conference on Monday. The “Pay Later” program will operate out of a wholly-owned subsidiary called Apple Financing LLC, which has the necessary state lending licenses to offer the feature. The new service will turn Apple into somewhat of a bank (though it doesn’t have a charter) as it makes financial services a deeper part of its ecosystem.
Retail earnings have been incredibly scattershot in May and June, with winners and losers seeing wildly differing share reactions and revealing important insights on specific subsectors. One of the biggest losers has been Target, whose share price has tumbled 30% since reporting Q1 results on May 18. Earnings came in far from the bullseye after higher costs weighed in on profitability, but the company had another surprise in store for investors after slashing guidance on Tuesday.
Also happening in the U.S. market is the stalling of the Twitter acquisition by billionaire Elon Musk. During the week, things got a bit worrying after the billionaire warned that he could walk away from the $44 billion acquisition if the platform does not provide detailed information on spam and fake accounts. “This is a clear material breach of Twitter’s obligations,” Musk’s lawyers wrote in a letter, adding that the company was “actively resisting and thwarting his information rights.” In the past, Twitter CEO Parag Agrawal has said he “doesn’t believe that this specific [bot] estimation can be performed externally, given the critical need to use both public and private information (which we can’t share).”
In the energy market, the national average price at the pump has surpassed $5.00 per gallon, according to GasBuddy, an industry consultant that surveys prices at more than 150K stations nationwide. The average from AAA is also likely to reach that level this weekend, with prices standing at $4.986 per gallon as of early Friday. For energy investors, the supply-demand imbalance appears most acute in the refining sector, where names like Valero (VLO), HF Sinclair (DINO) and Par Pacific (PARR) stand to benefit from record margins, while integrated producers like Exxon (XOM), BP (BP) and Chevron (CVX) are better equipped to manage a refining bottleneck than upstream peers.
Top 5 gainers
- Aeroclean Technologies Inc (AERC) 427.43%
- Applied Uv Inc (AUVI) 157.94%
- Heartcore Enterprises Inc (HTCR) 113.76%
- Redbox Entertainment Inc (RDBX) 106.57%
- The Singing Machine Company Inc (MICS) 96.37%
Top 5 losers
- Integrated Media Technology (IMTE) -76.21%
- Rise Education Cayman Ltd ADR (REDU) -58.41%
- Owlet Inc (OWLT) -57.77%
- Celularity Inc (CELU) -57.38%
- Gelesis Holdings Inc (GLS) -55.02%