After an initial move to the upside, stocks have turned lower over the course of morning trading on Monday. The major averages have pulled back well off their highs of the session and into negative territory.
Currently, the major averages are posting modest losses on the day. The Dow is down 30.89 points or 0.1 percent at 33,278.62, the Nasdaq is down 37.22 points or 0.3 percent at 12,291.29 and the S&P 500 is down 7.74 points or 0.2 percent at 4,122.88.
The downturn on Wall Street came following the release of a report from the University of Michigan showing U.S. consumer sentiment deteriorated by much more than anticipated in the month of May.
The report said the consumer sentiment index tumbled to 57.7 in May from 63.5 in April, while economists had expected the index to edge down to 63.0.
With the much bigger than expected decrease, the consumer sentiment index slumped to its lowest level since hitting 56.8 last November.
“While current incoming macroeconomic data show no sign of recession, consumers’ worries about the economy escalated in May alongside the proliferation of negative news about the economy, including the debt crisis standoff,” said Surveys of Consumers Director Joanne Hsu.
She added, “Throughout the current inflationary episode, consumers have shown resilience under strong labor markets, but their anticipation of a recession will lead them to pull back when signs of weakness emerge.”
Hsu also said year-ahead inflation expectations receded slightly to 4.5 percent in May after spiking to 4.6 percent in April.
Meanwhile, long-run inflation expectations rose to 3.2 percent in May from 3.0 percent in April, reaching their highest reading since 2011.
A separate report released by the Labor Department before the start of trading showed U.S. import prices increased by slightly more than expected in the month of April.
The Labor Department said import prices climbed by 0.4 percent in April after falling by a revised 0.8 percent in March.
Economists had expected import prices to rise by 0.3 percent compared to the 0.6 percent decrease originally reported for the previous month.
Despite the monthly increase, import prices in April were down by 4.8 percent compared to the same month a year ago.
The year-over-year decrease was unchanged from a revised figure in March and reflected the largest over-the-year drops since May 2020.
“Given our expectation for the Fed to hold rates high until year-end, the import price deflationary cycle will intensify in the months ahead,” said Matthew Martin, U.S. Economist at Oxford Economics.
Despite the downturn by the broader markets, most of the major sectors are showing only modest moves in morning trading.
Banking and airline stocks are seeing some weakness, while networking stocks have shown a slight move to the upside.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan’s Nikkei 225 Index advanced by 0.9 percent, while China’s Shanghai Composite Index slumped by 1.1 percent.
Meanwhile, the major European markets have all moved to the upside on the day. While the German DAX Index has climbed by 0.5 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index are both up by 0.4 percent.
In the bond market, treasuries are giving back ground after moving notably higher over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.9 basis points at 3.436 percent.
Business News
U.S. Stocks Move Modestly Lower After Seeing Initial Strength
2023-05-12 14:55:50
