Dow, S&P 500 Join Nasdaq Firmly In Negative Territory

Stocks have moved mostly lower over the course of the trading session on Wednesday, with the Dow and the S&P 500 joining the tech-heavy Nasdaq firmly in negative territory following the mixed performance seen earlier in the day.

The major averages have seen further downside in recent trading, falling to new lows for the session. The Dow is down 263.96 points or 0.8 percent at 31,896.78, the Nasdaq is down 316.65 points or 2.7 percent at 11,421.02 and the S&P 500 is down 52.67 points or 1.3 percent at 3,948.38.

The weakness that has emerged on Wall Street comes as traders digest a highly anticipated Labor Department report showing the annual rate of consumer price growth slowed by less than expected.

While the report showed the annual rate of consumer price growth slowed to 8.3 percent in April from a 40-year high of 8.5 percent in March, economists had expected the pace of growth to slow to 8.1 percent.

The annual rate of growth in core consumer prices also slowed to 6.2 percent in April from 6.5 percent in March, although the rate was expected to decelerate to 6.0 percent.

On a monthly basis, the Labor Department said its consumer price index rose by 0.3 percent in April after surging by 1.2 percent in March. Economists had expected prices to edge up by 0.2 percent.

Core consumer prices, which exclude food and energy prices, climbed by 0.6 percent in April after rising by 0.3 percent in March. Core prices were expected to increase by 0.4 percent.

The data has added to recent concerns the Federal Reserve will raise interest rates more aggressively in an effort to bring inflation down at a faster rate.

Traders have recently expressed concerns more aggressive moves by the Fed and other central banks could lead to a period of stagflation or an outright recession.

“Overall, the April data will probably strengthen the Fed’s resolve to continue hiking rates by 50bp at the next couple of meetings – and could lead to renewed speculation about a 75bp hike or an inter-meeting move,” Andrew Hunter, Senior U.S. Economist at Capital Economics.

He added, “But with goods shortages tentatively easing and signs that wage growth is set to cool, we still think a more pronounced drop back in inflation will allow officials to slow the pace of tightening in the second half of the year.”

Sector News

Housing stocks have moved sharply lower over the course of the session, dragging the Philadelphia Housing Sector Index down by 3.1 percent to its lowest intraday level in well over a year.

Substantial weakness has also emerged among computer hardware stocks, as reflected by the 2.9 percent nosedive by the NYSE Arca Computer Hardware Index. The index has also fallen to a more than one-year intraday low.

Retail stocks are also seeing considerable weakness in afternoon trading, resulting in a 2.7 percent slump by the Dow Jones U.S. Retail Index.

Airline, semiconductor and biotechnology stocks have also come under pressure over the course of the session, while some strength remains visible among tobacco and energy stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan’s Nikkei 225 Index edged up by 0.2 percent, while China’s Shanghai Composite Index advanced by 0.8 percent.

The major European markets also moved to the upside on the day. While the French CAC 40 Index surged by 2.5 percent, the German DAX Index shot up by 2.2 percent and the U.K.’s FTSE 100 Index jumped by 1.4 percent.

In the bond market, treasuries have climbed firmly into positive territory after showing a lack of direction earlier in the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down 6.6 basis points at 2.927 percent.

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