Stocks Tumble as Early Resiliency Wanes…..

U.S. equities were lower, unable to carry over the resiliency seen yesterday amid the continued flurry of headwinds. Inflation remained the major source of contention to foster economic growth concerns as the Fed and other central banks tighten monetary policies to try to combat the pricing pressures. Housing activity remains hampered by the recent spike in interest rates, with mortgage applications falling for a fourth-straight week. Meanwhile, wholesale inventories for April were revised higher. On the earnings front, Campbell Soup topped estimates, along with Thor Industries, but Scotts Miracle-Gro lowered its guidance, and Dow component Intel offered cautious commentary. In other equity news, Western Digital announced that it is reviewing potential strategic alternatives. Treasuries were lower, applying upward pressure on yields, and the U.S. dollar ticked higher to add to a recent rally, while crude oil prices continued to push higher, and gold gained ground. Europe was mostly lower ahead of tomorrow’s monetary policy decision from the European Central Bank, and Asia finished mixed after India’s central bank raised rates by a larger amount than anticipated.

The Dow Jones Industrial Average fell 269 points (0.8%) to 32,911, the S&P 500 Index declined 45 points (1.1%) to 4,116, and the Nasdaq Composite lost 89 points (0.7%) to 12,086. In moderate volume, 4.1 billion shares of NYSE-listed stocks were traded, and 4.6 billion shares changed hands on the Nasdaq. WTI crude oil moved $2.70 higher to $122.11 per barrel. Elsewhere, the gold spot price increased $3.60 to $1,855.70 per ounce, and the Dollar Index gained 0.2% to 102.56.

Mortgage applications continue to slide amid the spike in interest rates…..

The MBA Mortgage Application Index declined 6.5% last week, following the prior week’s decrease of 2.3%. The index was down for a fourth week as a 5.6% drop in the Refinance Index was accompanied by a 7.1% fall for the Purchase Index. The string of losses continued as the average 30-year mortgage rate rose 7 basis points (bps) to 5.40%, and is up 225 bps versus a year ago.

April wholesale inventories grew 2.2% month-over-month (m/m), upwardly-revised from the previously reported 2.1% gain, where forecasts called for it to remain, but below March’s 2.7% increase. Sales increased 0.7%, after March’s favorably-adjusted 1.8% advance.

Treasuries are lower to lift yields which have seen choppy action as markets anticipate tighter Fed monetary policy amid the backdrop of persistent inflation and signs of slowing economic growth.

©2022 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.

Schwab Center for Financial Research (“SCFR”) is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.