US market: S&P and Dow down for second week amid negative Macroeconomic cues

U.S. stocks recorded marginal gains on Monday that saw the Nasdaq somehow managing to close in the green. However, the S&P 500 and Dow continued their losing streak as investors continued to worry about interest rate hikes.

U.S. stocks found a footing on Tuesday, with tech stocks leading the rally as investors somewhat felt revealed after there were no major surprises during Fed Chair Powell’s testimony to Congress. All the three major indexes ended in positive territory.

U.S. stocks closed slightly higher on Wednesday after inflation hit a four-decade high but came in line with economists’ expectations. All the three major indexes ended in positive territory.

U.S. stocks closed sharply lower on Thursday, led by a huge selloff in tech stocks as the Nasdaq snapped its three-day winning streak after rising interest rate worries once again dented investors’ spirits. All the three major indexes ended in negative territory.

Stocks ended mixed on Friday at the end of a volatile week, with investors monitoring a mixed set of bank earnings and a bigger-than-expected drop in U.S. retail sales. Over the week, S&P fell by 0.3%, while the Dow fell 0.9%. 

Weekly market stats with IND

Let’s see the major developments during the week:

Inflation rise: The Labor Department reported that overall consumer prices had risen 7.0% over the past year, the largest gain on a 12-month basis since June 1982. Core inflation excluding food and energy rose 5.5%, the most since February 1991. Core producer prices, reported Thursday, rose 8.3%, the most in records going back to 2011. The week’s inflation data did little to calm fears but came in largely in line with expectations. 

Retail Sales: The week’s biggest surprise, arguably, was a 1.9% drop in retail sales in December.  Many analysts pointed to caution over the omicron variant of the coronavirus in restraining shoppers, but online sales also fell sharply. Import and export prices also reversed course and fell during the month, while industrial production contracted slightly.

Macroeconomic update: Weekly jobless claims rose unexpectedly to 2.3 lakh, the highest number since mid-November. Continuing claims however, fell more than expected to 1.56 million. Financials shares came under pressure on Friday as JPMorgan Chase and Citigroup, typically among the first major companies to release results, reported lower profits in the fourth quarter. 

Treasury Yield: After climbing above 1.80% during intraday trading Monday, the yield on the benchmark 10-year U.S. Treasury note slid to 1.74% by Friday morning, as longer-term U.S. government debt rallied amid wavering risk sentiment. Meanwhile, short-term rates continued their ascent in anticipation of tighter monetary policy, leading to a flatter yield curve.

Covid Update: The coronavirus has picked up pace in the US. With the Omicron variant spreading rapidly, the country is averaging more than 8 lakh new cases a day, far more than at any previous point in the pandemic. Around 63% of the country is now fully vaccinated. The overall number of Covid cases stands around 65 million.