Technology and growth stocks, whose valuations are based more on future cash flows, led the decline. Microsoft Corp (MSFT.O) and Apple Inc (AAPL.O) were among the heaviest weights on the S&P 500 and Nasdaq. Following the Inflation Report, US 10-year benchmark bond yields reached 3.152%, the highest since May 9. Sign up now for FREE unlimited access to Reuters.com Register The US Department of Labor report showed that the consumer price index (CPI) rose by 1.0% last month, after rising 0.3% in April. Economists polled by Reuters had forecast that the monthly CPI would increase by 0.7%. On an annual basis, the CPI increased by 8.6%, the highest gain since 1981 and after a jump of 8.3% in May. read more A trader works on the New York Stock Exchange (NYSE) in Manhattan, New York, USA, May 20, 2022. REUTERS / Andrew Kelly read more Stocks have been volatile this year and recent sales are largely linked to uncertainty about inflation prospects and interest rates. “Inflation last month was definitely warmer than expected and a reminder that inflation will be with us for longer than we expected,” said Michael Sheldon, chief investment officer at RDM Financial Group at Hightower in Westport, Connecticut. “But there are signs in the economy that inflation will eventually start to slow down and the Fed will probably do whatever it takes to keep raising interest rates and reducing inflation for the next 12 to 18 months.” According to preliminary data, the S&P 500 (.SPX) lost 117.05 points or 2.91%, to close at 3,900.77 points, while the Nasdaq Composite (.IXIC) lost 415.07 points or 3.53 %, at 11,339.16 points. The Dow Jones Industrial Average (.DJI) fell 882.47 points or 2.73%, to 31,395.72. The inflation report was released ahead of an expected second rate hike by 50 basis points by the Fed next Wednesday. A further half percentage point is priced for July, with a high probability of a similar move in September. Netflix Inc (NFLX.O) retreated after Goldman downgraded the flow giant’s share to “sell” from “neutral” due to a potentially weaker macroeconomic environment. Sign up now for FREE unlimited access to Reuters.com Register Additional references by Devik Jain, Mehnaz Yasmin and Shreyashi Sanyal in Bengaluru. Edited by Arun Koyyur, Aditya Soni and Jonathan Oatis Our role models: The Thomson Reuters Trust Principles.
