Inflation Angst Weighs Down Stocks…..

Losses for U.S. stocks accelerated today, as the recent downdraft in Information Technology and other growth-oriented issues began to permeate across most sectors. The value-centric stocks were the biggest laggards on the day with the Energy, Industrials and Financials sectors all notably lower. Angst regarding the uncertainty surrounding inflation remained a key feature throughout the session as investors continued to ponder the implications of rising inflation pressures on the Fed’s highly accommodative monetary policy. Meanwhile, tomorrow is set to bring about the much anticipated first look at inflation data for April. In other economic news, small business optimism improved by a slightly smaller amount than expected, while job openings rose to a record high. Treasuries dipped to modestly lift yields, and the U.S. dollar remained soft. Crude oil prices and gold both rose modestly. Corporate news again was focused on earnings, as Simon Property Group saw pressure despite topping quarterly expectations, and Callaway Golf gained ground on its upbeat report. Asia finished mostly lower, led by a drop in Japan, and Europe saw widespread losses paced by the persistent weakness in tech.

The Dow Jones Industrial Average fell 474 points (1.4%) to 34,269, the S&P 500 Index decreased 36 points (0.9%) to 4,152, and the Nasdaq Composite declined 12 points (0.1%) to 13,389. In heavy volume, 994 million shares were traded on the NYSE and 4.7 billion shares changed hands on the Nasdaq. WTI crude oil ticked $0.36 higher to $65.28 per barrel. Elsewhere, the Bloomberg gold spot price gained $2.00 to $1,838.07 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was little changed at 90.18.

Small business optimism ticks higher, job openings continue to climb…..

The National Federation of Independent Business (NFIB) Small Business Optimism Index for April improved to 99.8 from March’s 98.2 level, but slightly below the Bloomberg estimate of an increase to 100.8. The index has increased 4.8 points over the past three months since January but a record 44% of owners reported job openings that could not be filled.

Eight of the ten index components improved and two declined, with earnings trends and capital spending activity both improving as the former remained at a net negative reading. The NFIB said, “Small business owners are seeing a growth in sales but are stunted by not having enough workers.” The NFIB Uncertainty Index decreased one point to 80, while the percentage of owners expecting better business conditions over the next six months fell seven points to a net negative 15%. The report added that, “Finding qualified employees remains the biggest challenge for small businesses and is slowing economic growth. Owners are raising compensation, offering bonuses and benefits to attract the right employees.”

Further illustrating the demand for workers, the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS), a measure of unmet demand for labor, showed 8.12 million jobs were available to be filled in March. This compares to forecasts calling for 7.50 million jobs and February’s upwardly revised 7.53 million figure. This was a record high for job openings and the report showed the hiring rate rose to 4.2% from February’s 4.0% pace, while the separations rate dipped to 3.7% from the prior month’s 3.8% pace.

Treasuries dipped with the yield on the 2-year note flat at 0.16%, while the yields on the 10-year note and 30-year bond both rose 2 basis points to 1.62% and 2.35%, respectively.

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