The First Slice for Thursday, May 12, 2022

Stocks finished lower Wednesday, with the Dow booking its biggest 5-day drop in almost two years, following an eagerly awaited consumer price index reading that showed U.S. inflation slowed less than anticipated in April.

  • The Dow fell -326.63 or -1.02%
  • The S&P 500 shed -65.87 or -1.65%
  • The Nasdaq fell -373.44 or -3.18%

Stocks closed lower in choppy trade, as Wall Street attempted to parse the effects of inflation data that showed April consumer prices rose at an 8.3% annual pace, slowing from a more-than-40-year high of 8.5% in March. 

The reading, however, was above the 8.1% pace expected by economists surveyed by The Wall Street Journal and underscored that inflation continues to run at a torrid pace. The so-called core rate of inflation, which omits food and energy, also rose by a somewhat stronger 0.6%. Wall Street had forecast a 0.4% increase. The increase in the core rate over the past year also slowed to 6.2% from a 40-year high of 6.5% in March.

The data prompted President Joe Biden to again highlight his administration’s efforts to fight inflation while speaking at an Illinois farm on Wednesday. It also reinforced expectations for the Fed to continue on an aggressive path of rate hikes and policy tightening. But it provided little salve to families already facing high costs at the grocery store and gas pump, or to investors burned by its effects in markets.

Energy stocks rose 1.4%. Oil futures jumped, with the U.S. benchmark closing up 6% to $105.71 a barrel after reports that COVID cases were easing in Beijing and Shanghai, driving hopes for an easing of restrictions and pressure on the global economy. 

Separately, data showed China’s consumer-price index rose 2.1% in April from a year earlier, picking up from March’s 1.5% increase. The U.S. also posed a record $308 billion budget surplus in April as federal tax receipts surged, putting the government on a path to register a budget deficit in fiscal 2022 below $1 trillion for the first time since the start of the pandemic…….Full Loaf Hot Link[read more]

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