Wall Street ended the week sharply lower with increasing anxiety following inflation data, and volatility dominated stock trading, and recently selling was linked to a large extent with uncertainty, the Standard & Poor’s 500 index fell by 117.05 points, equivalent to 2.91%, to close at 3900.77 points. While the Nasdaq Composite Index lost 415.07 points, or 3.53%, to 11339.16 points, and the Dow Jones Industrial Average fell 882.47 points, or 2.73%, to 31395.72 points.
US stocks closed sharply lower on Friday, and recorded the largest weekly percentage decline since January, and according to the data, Standard & Poor’s lost 5.06% during the week, Dow Jones 4.58% and Nasdaq 5.60%, as a greater than expected rise led to consumer price inflation in the states. The United States in May increased investor fears of larger interest rate increases by the Federal Reserve, and technology shares, whose valuations depend more on future cash flows, led the decline.
After the inflation report, the US 10-year Treasury yields reached 3.152%, the highest level since May 9, and the US Department of Labor report showed that the consumer price index rose by 1% last month following rising 0.3% in April, and economists were A Archyde.com poll expected the monthly CPI to rise 0.7% and on an annualized basis the CPI rose 8.6%, the biggest increase since 1981, following a 8.3% jump in April.
European
European shares fell 2.7%, Friday, following inflation in the United States came in higher than expected, raising the possibility of a recession as central banks try to rein in prices.
The pan-European Stoxx 600 losses were broad, led by a 4.8% drop in the banking sector. The index continued its losses for the fourth consecutive session, to approach the lowest level since May 12, and is heading to incur weekly losses of more than 3%.
Italy’s MIB index plunged 5.2%, to its lowest level in three months. Spain’s Ibex fell 3.7%, while other major exchanges in the region lost more than 2% each.
The headline inflation rate for the month of May in the US came in at 8.6%, exceeding expectations of 8.3%, indicating that the Federal Reserve may continue to raise interest rates by 50 basis points until September to combat inflation.
Stocks took a hit Thursday following the European Central Bank said it will present its first interest rate hike next month since 2011, and may make a bigger move in September.
Eurozone shares fell 3.1% on Friday.
Concerns regarding demand and growth in China, the world’s second-largest economy, also mounted, following Shanghai and Beijing imposed new restrictions to combat the COVID-19. Among the individual stocks, GlaxoSmithKline rose 1.6 percent following the drug company said that one of its vaccines proved successful in a late-stage trial that included the elderly.
Shares of regional airlines fell as labor strife in Europe raised expectations of travel problems during the busy summer season.
Shares of Ryanair, International Consolidated Airlines, Lufthansa and Wizz Air fell between 1.6 and 4.1 percent.
Japanese
Japan’s Nikkei index ended a five-session winning streak on Friday, tracking Wall Street’s overnight decline as investors awaited key US inflation data that will guide the Federal Reserve’s monetary policy tightening path.
The Nikkei index rose 0.23% during the week, with gains for the fourth consecutive week, while the broader Topix index rose 0.51% during a week.
On Friday, stocks that are expected to grow at a much higher rate than the market’s growth rate, including technology companies, fell as the Topix index of growth companies fell 1.73%.
Chip test equipment maker Advantest fell 4.2%, and chip maker Tokyo Electron fell 3.22%.
Shares of Fast Retail, the operator of clothing chain Uniqlo and SoftBank Group for technology investments, fell 0.93% and 2.01%, respectively. (Archyde.com)
