Major Stock Indexes on Track for Weekly Declines
By Joe Wallace
Major U.S. stock indexes jumped Friday to end a choppy week
during which signs of a jump in inflation rattled markets.
The S&P 500 rose 1.1% in recent trading. The Dow Jones
Industrial Average added about 250 points, or 0.8%. The Nasdaq
Composite advanced 1.8%.
All three major indexes remained on track for weekly losses. The
S&P 500 has fallen 1.7% this week, while the Dow is down about
1.4%. The tech-heavy Nasdaq has been the hardest hit, losing around
2.9% for the week.
Stocks recouped some losses Thursday and Friday after sliding in
response to data showing consumer prices leapt in April, which
added to evidence from commodity markets of building inflation.
Investors worry that a surge in prices for raw materials will eat
into profit margins. A burst of consumer-price inflation could also
prompt the Federal Reserve to pare back easy-money policies that
have buoyed stocks.
But several Fed officials have said this week that the central
bank has no intention to withdraw that support, helping to calm
markets. Major indexes bounced Thursday following three sessions of
declines and continued to advance to end the week. The Fed needs to
see several more months of data on jobs and inflation before
determining when to begin tightening monetary policies, Gov.
Christopher Waller said Thursday.
And some investors and analysts said that they were reluctant to
draw conclusions from the data released this week and remained
confident that the Fed would be patient in terms of raising
"The Fed has been very consistent," said Paul Donovan, chief
economist at UBS Global Wealth Management. "That is telling you
something: it is telling you [higher inflation] clearly is
Nonetheless, Mr. Donovan said he expects markets to remain jumpy
in response to higher inflation numbers in the coming months.
"There will be volatility in the near term over this: not just
volatility over inflation, but volatility over the central bank
response to that," he said.
Retail sales were unchanged in April from a month before, the
Commerce Department said. Economists had expected a rise of 0.8%,
following a surge in spending in March, when government stimulus
checks boosted household incomes. And fresh data released early
Friday showed that consumer sentiment weakened in May as inflation
expectations ticked up.
In corporate news, Walt Disney shares fell 3.5%. Disney said
late Thursday that its flagship streaming service added fewer users
than Wall Street had expected in its fiscal second quarter after
months of torrential growth.
While the Covid-19 streaming boom is slowing for now, other
pandemic trends appear to be stickier. DoorDash gained more than
19% after saying revenue tripled in the first quarter, showing
sustained demand for food-delivery services even as coronavirus
vaccinations picked up.
Some of individual investors' favorite stocks were among the
rare bright spots in the market this week, continuing a string of
wild moves for meme stocks. Reddit-favorite AMC Entertainment
climbed 9.8%, extending gains after rocketing higher Thursday.
Hertz Global Holdings shares have more than doubled this week as
prospects brightened for stockholders in the company, which is set
to emerge from bankruptcy.
And this week, the government bond market didn't offer a hedge
to investors looking to shield themselves from the volatility of
the stock market. Treasury prices have fallen this week alongside
stocks, sending yields higher, on rising worries about inflation.
In the bond market, the yield on 10-year Treasury notes recently
hovered at 1.625%, from 1.576% last week. Yields fall when bond
prices rise and rising inflation chips away at the purchasing power
of the bonds' fixed payments.
Brent-crude futures, the benchmark in energy markets, rose 1% to
$67.75 a barrel in recent trading. Copper futures in New York,
which hit a record Tuesday, slipped 1.1% to $4.64 a pound.
A recent surge in commodity prices has sharpened focus among
investors on companies that are likely to see profits pinched by
higher input costs.
"There is more pricing pressure and that will be harder on
certain companies," said Andrew Sheets, chief cross-asset
strategist at Morgan Stanley. Consumer-discretionary stocks in the
U.S. are most vulnerable, while banks and other financial firms are
relative beneficiaries because they have minimal raw-material
inputs, he added.
In overseas markets, the Stoxx Europe 600 gained 1.1%.
Major Asian markets rallied. Japan's Nikkei 225 gained 2.3%,
China's Shanghai Composite Index rose 1.8% and Taiwan's Taiex added
Gunjan Banerji contributed to this article.
Write to Joe Wallace at email@example.com
(END) Dow Jones Newswires
May 14, 2021 11:36 ET (15:36 GMT)
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