This week S&P 500 almost entered bear market territory . Each of the major indices fell more than 2.0%, as the market remained pressured by growth concerns, heightened volatility, and downwards momentum. The Nasdaq Composite lost 2.8%, the Russell 2000 lost 2.6%, the S&P 500 lost 2.4%, and Dow Jones Industrial Average lost 2.1%. As a result, Dow fell for the seventh week in a row, the longest losing streak since the late winter of 1980; the S&P 500 fell for the sixth week in a row, the longest losing streak since the fall of 2012; the Nasdaq fell for the sixth week in a row, longest weekly losing streak since 2011.
Ten of the 11 S&P 500 sectors closed lower and five of which fell more than 3.0%, namely information technology (-3.5%), consumer discretionary (-3.4%), financials (-3.6%), and real estate (-3.9%). The consumer staples sector escaped the week with a 0.3% gain.
The market concerned about the topic below this week:
Expectations for the Fed to remain on its aggressive tightening plans amid inflation data that remained elevated
Russia threatened retaliation if Finland follows through with plans to join NATO
Early reports that indicated that Shanghai was again tightening COVID-19 restrictions, although there was hope that those restrictions would soon ease later this month
The IEA lowered its global growth oil demand forecast, and Saudi Arabia, according to Bloomberg, cut oil prices for Asian buyers due to weak demand
Walt Disney (DIS) warned that Disney+ subscriber growth is apt to slow down in the second half of the year
A slew of high-growth story stocks continued to disappoint with earnings and/or guidance like Coinbase Global (COIN), Unity Software (U), Fiverr (FVRR), Peloton (PTON), Upstart (UPST), GoodRx (GDRX), Sofi Technologies (SOFI), and Palantir (PLTR)
Uber (UBER) was planning to cut costs, according to CNBC
Growth concerns, peak inflation hopes, and a general flight to safety contributed to increased demand for Treasuries, which drove yields lower in a curve-flattening trade this week. The 2-yr yield dropped eight basis points to 2.59%, and the 10-yr yield dropped 18 basis points to 2.94%. The U.S. Dollar Index rose 0.9% to 104.57.
The one rally effort, however, that didn't get sold was the one at the end of the week after the S&P 500 almost entered bear market territory (it was down 19.9% from its all-time high). That key level was a presumed indicator that it was time for an overdue bounce.
On Friday Twitter (TWTR 40.70, -4.38, -9.7%) shares fell about 10% amid growing doubts about Elon Musk's takeover of the company. Mr. Musk tweeted that the deal was temporarily on hold following recent analysis that showed spam/fake accounts represented less than 5% of Twitter users -- less than his expectations -- but later said that he was still committed to the deal.
Separately, Fed Chair Powell, St. Louis Fed President Bullard (FOMC voter), Cleveland Fed President Mester (FOMC voter), San Francisco Fed President Daly (non-voter) each said they prefer 50-bps rate increases instead of 75-bps. Treasury Secretary Yellen, meanwhile, said she doesn't think the huge losses in stable coins will cause systemic issues for the financial system.
On a related note, the Senate confirmed Fed Chair Powell for a second term and confirmed Lisa Cook to the Fed Board. Lorie Logan was named Dallas Fed President, effective Aug. 22.
Import prices were flat in April after increasing 2.9% in March. Excluding oil, import prices rose 0.4% after increasing 1.2% in March. Export prices rose 0.6% after increasing 4.1% in March. Excluding agriculture, export prices also rose 0.5% after increasing 4.1% in March.
For Hong Kong and Chinese stock markets, the CSI 300 Index rising 2.04% over the week, while the Hang Seng Index also outperformed external markets over the same period. During the week, the government announced the China's Consumer Price Index (CPI) rose by 2.1% YoY in April to a five-month high, while the Industrial Producer Price Index (PPI) rose by 8.0% over the same period, easing from its previous value. Separately, the Hong Kong dollar hit the lower bound of the currency peg, which force the HKMA bought another HK$2.847 billion from the market on Friday, for a total of HK$6.947 billion over two days.
In terms of major global asset prices, the yield on the 10-year U.S. Treasury bond continued to rise by 2.41%, to close at 2.92%, 34 basis points lower than the yield on the two-year Treasury bond. International oil prices rose across the board, with the WTI June contract up 3.8% to $110.16 a barrel. The July contract for Brent oil rose 3.51% to $111.22. This week, the U.S. oil June contract rose 0.36%, while the Brent oil July contract fell 1.04%. COMEX gold futures fell 0.78% to US$1,810.3 per ounce; the US dollar index fell 0.29% to 104.45, and the offshore RMB rose 282 basis points to 6.7993 against the US dollar.
Next week:
In the US, there is Empire State Manufacturing Survey for May and Net Long-term TIC Flows for March on Monday.
In China, key data on fixed investment, industrial production, and retail sales for April will be released.
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