Stocks Plummet on Recovery Concerns…..

U.S. equities plunged, decidedly paring the sharp rally off the March lows that has taken the Nasdaq back into record high territory, and has brought the S&P 500 close to positive figures for the year. Optimism surrounding progress on economic reopenings, a major catalyst to the recent run, was tempered by reports of a rise in new COVID-19 cases in some U.S. states, cultivating fears of a second wave of the pandemic. Moreover, risk aversion seemed to resurface in the wake of yesterday’s dovish commentary in the Fed’s monetary policy decision. Treasury yields were mixed and the U.S. dollar regained some footing after stumbling lately, while gold finished lower in choppy trading and crude oil prices tumbled. Data on the economic front showed U.S. initial jobless claims continue to moderate but remain starkly elevated and price inflation at the wholesale level came in mixed. In equity news, Grubhub agreed to be acquired by Amsterdam-based Just Eat for $7.3 billion, Target modestly increased its dividend, and Jack in the Box offered an upbeat look at Q3 sales. Europe finished solidly lower, while markets in Asia saw more modest losses.

The Dow Jones Industrial Average plunged 1,862 points (6.9%) to 25,128, the S&P 500 Index declined 188 points (5.9%) to 3,002, and the Nasdaq Composite slid 528 points (5.3%) to 9,493. In heavy volume, 1.3 billion shares were traded on the NYSE and 5.2 billion shares changed hands on the NASDAQ. WTI crude oil tumbled $3.26 to $36.34 per barrel and wholesale gasoline declined $0.09 to $1.12 per gallon. Elsewhere, the Bloomberg gold spot price declined $10.99 to $1,727.71 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was up 0.8% at 96.72.

Jobless claims remain elevated, wholesale price inflation mixed…..

Weekly initial jobless claims came in at 1,542,000 for the week ended June 6th, below the Bloomberg estimate of 1,550,000, and compared to the prior week’s upwardly-revised 1,897,000 level. The four-week moving average declined by 286,250 to 2,002,000, while continuing claims fell by 339,000 to 20,929,000, north of estimates of 20,000,000. The four-week moving average of continuing claims for the week ended May 30th dropped by 404,750 to 21,987,500.

The Producer Price Index (PPI) showed prices at the wholesale level in May rose 0.4% month-over-month (m/m), versus forecasts calling for a 0.1% gain and April’s unrevised 1.3% drop. The core rate, which excludes food and energy, dipped 0.1% m/m, in line with estimates and compared to April’s unadjusted 0.3% decline. Y/Y, the headline rate was 0.8% lower, compared to projections to match the prior month’s unadjusted 1.2% fall. The core PPI rose 0.3% y/y last month, south of estimates of a 0.4% increase and April’s unrevised 0.6% gain.

Treasuries were mixed, as the yield on the 2-year note rose 1 basis point (bp) to 0.17%, while the yield on the 10-year note decreased 8 bps to 0.67% and the 30-year bond rate declined 11 bps to 1.40%.

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