Markets Post Gains, but a Six-Straight Weekly Loss…..

U.S. equities finished the last session of a volatile week higher, but posted losses on a weekly basis for the sixth-straight time. The moves came as the markets continue to grapple with an expected aggressive Fed monetary policy tightening campaign, which Chairman Jerome Powell reinforced late Thursday. Global sentiment seemed to get some relief after Chinese officials suggested that COVID-related lock-downs—which have been a source of uneasiness—may be set to ease. However, rising interest rates and the U.S. dollar, along with signs of slowing economic growth continued to stymie conviction. On the equity front, Twitter was in focus after Elon Musk suggested his $44.0 billion deal to buy the social media platform is on hold, while Affirm Holdings rallied after posting a smaller-than-expected loss and raised its guidance. In economic news, consumer sentiment fell more than forecasts as inflation worries led to a fresh decade low, but import prices came in cooler than expected. Treasuries were lower to provide a lift to yields, and the U.S. dollar lost ground after a recent run, while crude oil prices rallied, and gold traded to the downside. Europe finished with broad gains and Asia was mostly higher to close out the week.

The Dow Jones Industrial Average rose 466 points (1.5%) to 32,197, the S&P 500 Index increased 94 points (2.4%) to 4,024, and the Nasdaq Composite advanced 434 points (3.8%) to 11,805. In heavy volume, 5.1 billion shares of NYSE-listed stocks were traded, and 5.8 billion shares changed hands on the Nasdaq. WTI crude oil jumped $4.36 to $110.49 per barrel. Elsewhere, the gold spot price traded $17.90 lower to $1,806.70 per ounce, and the Dollar Index was down 0.3% at 104.58. Markets were down for a sixth-straight week, as the DJIA fell 2.1%, the S&P 500 lost 2.4%, and the Nasdaq Composite dropped 2.8%.

The preliminary University of Michigan Consumer Sentiment Index (chart) for May showed that sentiment fell more than expected, dropping to 59.1 from April’s final reading of 65.2, and versus the Bloomberg consensus estimate calling for a decline to 64.0. The index fell back to a low not seen since 2011 as the expectations component of the report posted dropped solidly, as did the current conditions portion. Director of the survey Joanne Hsu said inflation remains on the forefront of consumers’ minds, per Bloomberg, adding that respondents mentioned inflation throughout the survey, whether the questions referred to their own personal financial situations, their outlook for the economy, or buying conditions. The 1-year inflation expectation remained at 5.4%, versus the expected 5.5% rate, the highest since December of 1981, and the 5-10 year inflation outlook held steady at 3.0% for the fourth-straight month.

The Import Price Index came in flat month-over-month (m/m) for April, versus the Bloomberg consensus estimate of a 0.6% gain, and compared to March’s upwardly-revised 2.9% increase. Versus last year, prices were up by 12.0%, compared to forecasts of a 12.3% increase and March’s upwardly-revised 13.0% rise.

Treasuries were lower, with yields rebounding from yesterday’s drop and the markets anticipating tighter Fed monetary policy following last week’s 50 basis point (bp) rate hike.

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