US open: Stocks sharply lower following hotter-than-expected inflation report

By Sharecast News

Sharecast News | 10 Jun, 2022

Updated : 15:23

Wall Street stocks were firmly in the red early on Friday as market participants digested some hotter-than-expected inflation data.

As of 1520 BST, the Dow Jones Industrial Average was down 2.38% at 31,503.65, while the S&P 500 was 2.64% weaker at 3,911.77 and the Nasdaq Composite came out the gate 3.12% softer at 11,387.02.

The Dow opened 769.14 points lower on Friday, extending losses recorded in the previous session as the session's primary focus was May's consumer price index report, which revealed the cost of living in the US rose more quickly than expected amid broad-based gains by categories. According to the Department of Labor, in seasonally adjusted terms, the Consumer Price Index rose by 1.0% month-on-month, pushing the year-on-year rate of gains to 8.6%, versus 8.3% in April and 8.6% for March.

At the core level, which excludes the oft volatile energy and food components, CPI was up by 0.6% on the month. In year-on-year terms, core CPI was ahead by 6.0% in annual terms, against increases of 6.4% and 6.2% in March and April, respectively. Economists were expecting a year-on-year increase of 8.3% for the main index and 5.9% for the core index.

AvaTrade's Naeem Aslam said: "Inflation engine is running steaming hot and there is still plenty more to come and this is what we can say about looking at the numbers today. Basically, inflation isn’t near its peak levels, and unfortunately, there is a lot more of these soaring numbers to come.

"Traders and investors are concerned as recession odds are only increasing with every day passing. Higher inflation has become an emotional matter now for consumers as it has started to seriously erode their disposable income. Consumers are constantly being pushed in a corner, and higher inflation is making them to make difficult choices."

Also on the macro front, a preliminary reading of the University of Michigan's consumer sentiment index fell sharply to a record low of 50.2 in June, well below market expectations for a reading of 58. The reading follows May's print of 58.4, the lowest since August 2011.

Still to come, last month's Federal Government budget statement will be published at 1900 BST.

No major corporate earnings were slated for release on Friday.

Reporting by Iain Gilbert at Sharecast.com

Dow Jones - Risers

Honeywell International Inc. (HON) $230.94 0.00%
Dowdupont Inc. (DWDP) $30.52 0.00%
Chevron Corp. (CVX) $177.37 -0.08%
Verizon Communications Inc. (VZ) $50.65 -0.58%
Walgreens Boots Alliance, Inc. (WBA) $41.43 -0.70%
Walmart Inc. (WMT) $120.09 -0.77%
Unitedhealth Group Inc. (UNH) $485.35 -0.83%
Merck & Co. Inc. (MRK) $87.12 -1.00%
Intel Corp. (INTC) $39.59 -1.04%
International Business Machines Corporation (CDI) (IBM) $136.38 -1.14%