US Market Weekly: Straight 8-Week Losing Streak By Dow Jones-First Since 1923

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It was a highly volatile market for the US investors as the broader market ended one more week in losses. The Dow lost 2.9% for its first eight-week losing streak since 1923. The S&P 500 lost 3% for the week, while the Nasdaq shed 3.8% - both posting seven-week losing streaks.

The US market failed to recover from last week's losses on Monday as investors weighed the potential for a US recession. The major averages vacillated between highs and lows during the trading session. The tech shares were the drags for the day. The shares of Tesla fell about 5.9%.

The US stocks rose on Tuesday as the market rebounded from the year's sharp decline and gained steam. Citigroup jumped about 7.6% after Warren Buffett’s conglomerate revealed it added a nearly $3 billion stake. Retail sales numbers came in about as expected. Consumer spending on retail rose 0.9% in April.

Dow Jones posted its biggest loss since 2020 on Wednesday after another major retailer warned of rising cost pressures, confirming investors’ worst fears over rising inflation and rekindling the brutal 2022 sell-off. The yield on the benchmark 10-year Treasury note dipped below 2.9% after briefly topping 3%.

Investors continued to dump equities on Thursday on fears Federal Reserve rate hikes to fight rapid inflation would tip the economy into a recession. The S&P 500 inched closer to a bear market. US weekly jobless claims rose to 218,000 for the week ending May 14, the latest hint that economic growth is slowing.

The US market on Friday started the day on a weak note and at one time S&P 500 was pushed into a bear market. At one point, it was down over 20% from its all-time high in January. The dramatic late-day reversal pushed the benchmark slightly into the green for the day.

Key highlights of the week:

Quarterly results: The week saw earnings reports from key retail giants - Walmart and Target. Both companies reported lower than expected operating margins driven by higher input costs from areas like freight and fuel. Target fell roughly 25% after earnings fell short of estimates. Results from Lowe’s, and Home Depot also fell short of expectations. Investors were also concerned that these retailers would be forced to pass on more of their higher input costs to customers in coming months, keeping inflation elevated.

Macroeconomic data: The week’s economic data offered mixed signals. Retail sales, excluding the auto segment, had risen more than expected in April. Industrial production, manufacturing production, and capacity utilization figures in April also surprised on the upside. However, Housing starts and existing home sales came in below estimates, reflecting the pressure from higher mortgage rates.

Aggressive rate hikes on radar: Fed Chair Jerome Powell told in an interview that taming inflation was an “unconditional need” and that policymakers wouldn’t hesitate to raise rates as much as necessary, even if it meant “some pain involved.”

Jobless claims: Initial jobless claims rose to 218,000 from a downwardly revised 197,000 last week, the highest weekly number since early March. The numbers are around the level last seen at the 2019 peak of the mini-boom created by then-President Donald Trump's tax cuts. There were fresh signs that the US economy is starting to cool down, as lay-offs hit a 10-week high and a closely watched survey of manufacturing activity took a sharp turn for the worse.

Treasury yield: Treasury yields continued a trend of falling rates this week in the face of rising recession fears. The yield on the benchmark 10-year Treasury note fell 7 basis points to 2.788%. The yield on the 30-year Treasury bond moved 7 basis points lower to 2.991%. Yields move inversely to prices and 1 basis point is equal to 0.01%. The 10-year yield started the week at about 2.90%.