US Market weekly: All Major Indices Ended Sharply Lower Amid Rate Hikes And Rising Inflation

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The market this week was driven by an update on how aggressively the Federal Reserve will act to curb rising inflation. Alongside, investors continued to monitor the ongoing conflict in Ukraine and lockdowns in China. The major indices posted losses for the week.

The market continued to fall on Monday as S&P 500 breached the 4000 level for the first time in more than a year. All sectors except for consumer staples dipped into the red. The combination of high rates and a potential recession as inflation surges hit other areas of the market. 

The market seesawed on Tuesday, and major indexes closed red for the fourth consecutive day. Treasury yields eased from multi year highs, and the benchmark 10-year Treasury note yield traded below 3% after hitting its highest level since late 2018 on Monday.

The market fell sharply on Wednesday. The decline was led by a decline in consumer discretionary and tech stocks. The core inflation number released came in higher which fueled fears about further interest rate hikes by the Fed. The oil prices continue to go up.

The Dow Jones continued to slide for the sixth straight day on Thursday. The market tried to rebound at the start of the day but failed to sustain the uptrend. As tech shares continued to slide - the Nasdaq is the only one in bear market territory, having fallen about 30% from its record high.

The market closed the week on a positive note on Friday with all major indexes closing in green for the first time this week. The Nasdaq posted its strongest one-day gain since November 2020. The rally was led by a gain in consumer discretionary and IT which added 4.1% and 3.4%, respectively. 

Key highlights of the week:

Quarterly results: First-quarter earnings season is slowing down, but there are several notable reports including Walt Disney and Occidental Petroleum reporting their results this week. BioNTech gained after the company posted a strong quarter. Disney shares fell to a two-year low as the media giant reported higher-than-expected streaming subscriber growth.

High inflation number: The Consumer Price Index (CPI) for all urban consumers increased 0.3% in April against a consensus of 0.2%, and the year-over-year index increased 8.3% through April 2022 against an estimate of 8.1%. More concerning were the core CPI numbers, which exclude food and energy prices. Core CPI increased by 0.6% in April against a consensus of 0.4%, double that of March.

Treasury yield: The 2-year Treasury yield rose 7.7 basis points to 2.597% from 2.52% this week. The yield on the 10-year Treasury rose 11.7 basis points to 2.932% from 2.815%. The yield on the 30-year Treasury bond rose 12.2 basis points to 3.091% from 2.985%.

Twitter Deal update: Twitter had informed the stock exchanges on May 2 that the fake or spam accounts on its platform represent less than 5% of its monetizable daily active users during the first quarter. The deal has been halted till it is ascertained whether spam or fake accounts represent less than five percent of the microblogging site's total users.

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