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Market Snapshot

https://www.briefing.com/stock-market-update

Dow 31730.30 -103.81 (-0.33%)
Nasdaq 11370.96 +6.73 (0.06%)
SP 500 3930.08 -5.10 (-0.13%)
10-yr Note +13/32 2.846
NYSE Adv 1601 Dec 1508 Vol 1.3 bln
Nasdaq Adv 2322 Dec 1962 Vol 6.6 bln

Industry Watch
Strong: Health Care, Real Estate, Consumer Discretionary, Communication Services, Industrials
Weak: Information Technology, Financials, Utilities

Moving the Market

-- Volatile conditions persist as do growth concerns, but session ends on better note after S&P 500 flirts with bear market territory

-- Russia threatens retaliation if Finland joins NATO

-- PPI data moderates on year-over-year basis, Fed Bullard says no need for 75-bps hike right now, Treasury Secretary Yellen does not see stable coin declines causing systemic issues

-- Short-covering activity

Volatile session ends on better note
12-May-22 16:20 ET
Dow -103.81 at 31730.30, Nasdaq +6.73 at 11370.96, S&P -5.10 at 3930.08

[BRIEFING.COM] The S&P 500 declined 0.1% on Thursday, as risk sentiment remained pressured by growth concerns, ongoing selling in large-cap technology stocks, and heightened volatility. The Dow Jones Industrial Average lost 0.3%, while the Nasdaq Composite gained 0.1% and Russell 2000 gained 1.2%.

The price action was a big focal point today, with the S&P 500 being up as much as 0.8% in the morning and then down as much as 1.9%, which took the benchmark index within a few points of bear market territory. The latter is often defined as a decline of 20.0% or greater from a recent high.

Flirting with bear market territory might have triggered a mechanically-oriented bounce that lifted six of the 11 S&P 500 sectors into positive territory by the close. The health care (+0.9%), consumer discretionary (+0.8%), and real estate (+0.7%) sectors outperformed in positive territory.

The information technology sector (-1.1%), however, was a heavy drag on the market and for sentiment, too, considering Apple (AAPL 142.56, -3.94, -2.7%) continued to struggle after losing its spot as the largest company in the world by market cap yesterday. The utilities sector (-1.2%) was the weakest link.

Growth concerns, meanwhile, lingered as Russia threatened retaliation if Finland joins NATO as planned, the IEA lowered its global growth demand forecast, and Walt Disney (DIS 104.31, -0.90, -0.9%) warned that Disney+ subscriber growth is apt to slow down in the second half of the year. On a related note, Disney missed top and bottom-line estimates.

The Treasury market continued to signal growth concerns via another drop in rates, which was also a byproduct of some safe-haven positioning amid the market volatility and peak inflation expectations following the Producer Price Index (PPI) for April. The PPI report featured a better-than-feared core PPI reading along with a moderation in the year-over-year increases.

The 2-yr yield fell 13 basis points to 2.51%, and the 10-yr yield fell ten basis points to 2.82% (recall, it hit 3.20% early this week). The U.S. Dollar Index remained strong in these uncertain times, rising 0.9% to 104.80 -- setting a fresh 20-year high. WTI crude futures rose 1.2%, or $1.26, to $106.40/bbl despite the IEA's reduced forecast.

As for the data, the Producer Price Index for final demand increased 0.5% m/m, as expected, while the index for final demand excluding food and energy, increased just 0.4% (Briefing.com consensus 0.6%). On a year-over-year basis, they were up 11.0% (versus 11.5% in March) and 8.8% (versus 9.5% in March), respectively.

Looking at some positive news, St. Louis Fed President Bullard (FOMC) and San Francisco Fed President Daly (non-voter) said they prefer 50-bps rate hikes instead of 75-bps, and Treasury Secretary Yellen said she doesn't think the huge losses in stable coins will cause systemic issues for the financial system. On a related note, Fed Chair Powell was confirmed by the Senate for a second term.

Separately, the session was filled with short-covering activity, which was notably evident in the sharp gains in Bumble (BMBL 22.36, +4.73, +26.8%) and Rivian (RIVN 24.30, +3.70, +18.0%) following their positive earnings reports, as well as the surge in Carvana (CVNA 37.40, +7.40, +24.7%) despite being downgraded to Hold from Buy at Stifel.

Reviewing Thursday's economic data:

The Producer Price Index for final demand increased 0.5% month-over-month in April, as expected, following an upwardly revised 1.6% increase (from 1.4%) in March. Excluding food and energy, the index for final demand jumped 0.4% (Briefing.com consensus 0.6%) following an upwardly revised 1.2% increase (from 1.0%) in March. There was a moderation in the year-over-year growth rates. The index for final demand was up 11.0%, versus 11.5% in March, and the index for final demand, excluding food and energy, was up 8.8%, versus 9.5% in March.
The key takeaway from the report is that there was some moderation in the year-over-year changes, but even so, inflation rates for producers remain at intolerably high levels that will pressure profit margins if not passed along to customers.
Initial jobless claims for the week ending May 7 increased by 1,000 to 203,000 (Briefing.com consensus 191,000). Continuing claims for the week ending April 30 decreased by 44,000 to 1.343 million. That is the lowest level since January 3, 1970.
The key takeaway from the report is that jobless claims continue to run near historically low levels that are consistent with a tight labor market that can continue to create wage-based inflation pressures.

Looking ahead, investors will receive Import and Export Prices for April and the preliminary University of Michigan Index of Consumer Sentiment for May on Friday.

Dow Jones Industrial Average -12.7 YTD
S&P 500 -17.5% YTD
Russell 2000 -22.5% YTD
Nasdaq Composite -27.3% YTD

Volatility continues into the close
12-May-22 15:30 ET
Dow -316.89 at 31517.22, Nasdaq -56.65 at 11307.58, S&P -31.07 at 3904.11

[BRIEFING.COM] The S&P 500 is down 0.8% heading into the close.

All 11 sectors are down, with information technology (-2.0%) and financials (-1.6%) leading the pack. Notably dragging down the technology sector is Apple (AAPL 141.03, -5.47, -3.7%) with a 4% decline.

Crude oil futures rose $1.26 (+1.2%) to $106.40/barrel despite the IEA lowering its global growth oil demand forecast.
S&P 500 flirts with bear market territory
12-May-22 15:00 ET
Dow -527.61 at 31306.50, Nasdaq -190.75 at 11173.48, S&P -64.09 at 3871.09

[BRIEFING.COM] The S&P 500 is trading near session lows with a 1.7% decline as there remains a lack of confidence regarding earnings prospects and the ability for the market to turn itself around.

Strikingly, the benchmark index came within a couple points of entering bear market territory, which is often defined as a drawdown of 20.0% or greater from a recent high. The S&P 500 was briefly down 19.9% from its all time-high earlier this afternoon. This is a level worth watching into the close.

Looking ahead, Affirm (AFRM 17.31, +2.67, +18.3%), FIGS (FIGS 12.03, -0.31, -2.5%), and Poshmark (POSH 9.57, +0.25, +2.7%) are some story stocks that will report earnings after the close.
Synchrony underperforms after Wolfe downgrade, Tapestry outperforms following earnings/buyback news
12-May-22 14:25 ET
Dow -500.44 at 31333.67, Nasdaq -185.98 at 11178.25, S&P -62.63 at 3872.55

[BRIEFING.COM] The S&P 500 (-1.59%) is narrowly in second place at this point on Thursday, holding just above session lows.

S&P 500 constituents Synchrony Financial (SYF 32.44, -2.89, -8.18%), AmerisourceBergen (ABC 149.93, -11.37, -7.05%), and WestRock (WRK 47.07, -3.19, -6.35%) dot the bottom of the standings. This morning Wolfe Research downgraded SYF to Underperform citing sensitivity to the credit card group amid likelihood of a recession, while ABC management commented on debt repayment plans as well as a possible share repurchase resumption, and WRK held an Investor Day this morning.

Meanwhile, Tapestry (TPR 30.30, +3.78, +14.25%) is today's best performer following earnings and a new buyback program.
Gold slips on Thursday amid rising dollar
12-May-22 14:00 ET
Dow -448.64 at 31385.47, Nasdaq -178.53 at 11185.70, S&P -55.74 at 3879.44

[BRIEFING.COM] The major averages are at or near session lows in recent trading, the tech-heavy Nasdaq Composite (-1.57%) now at the bottom of the standings.

Gold futures settled $29.10 lower (-1.6%) to $1,824.60/oz, pressured by a decent rise in the dollar.

Meanwhile, the U.S. Dollar Index adds about +1% to $104.88.