Markets Tumble Ahead of Tomorrow’s Inflation Report…..

U.S. equities accelerated to the downside in the final hour of trading, as investors await a key read on May consumer prices. As well, the European Central Bank (ECB) held its stance steady, but said it plans to raise its benchmark interest rate by 25 basis points next month and end its asset purchase program on July 1 after downgrading its economic growth outlook and boosting its inflation forecast. The persistent rise in prices and the move by central banks globally to tighten policy has fostered recession concerns. The economic calendar was light, showing an acceleration in weekly jobless claims. Treasuries were mixed and the U.S. dollar rallied, while crude oil prices cooled off after jumping above $122 per barrel yesterday and gold saw some pressure. On the equity front, Target Corporation raised its quarterly dividend, and Signet Jewelers topped earnings forecasts and issued favorable guidance, while Five Below missed revenue estimates and lowered its guidance. Europe finished with widespread losses after the ECB’s decision, and Asia was mixed with Chinese and Hong Kong markets moving lower as Shanghai renewed some COVID lock-downs.

The Dow Jones Industrial Average fell 638 points (1.9%) to 32,273, the S&P 500 Index declined 98 points (2.4%) to 4,018, and the Nasdaq Composite lost 332 points (2.8%) to 11,754. In moderate volume, 4.1 billion shares of NYSE-listed stocks were traded, and 5.3 billion shares changed hands on the Nasdaq. WTI crude oil moved $0.60 lower to $121.51 per barrel. Elsewhere, the gold spot price decreased $6.80 to $1,849.70 per ounce, and the Dollar Index gained 0.8% to 103.32.

Jobless claims accelerate more than expected

Weekly initial jobless claims (chart) came in at a level of 229,000 for the week ended June 4, versus the Bloomberg estimate calling for 206,000, and compared to the prior week’s upwardly-revised 202,000 level. The four-week moving average rose by 8,000 to 215,000, and continuing claims for the week ended May 28 were flat at 1,306,000, versus estimates of 1,303,000. The four-week moving average of continuing claims declined by 9,000 to 1,317,500.

Treasuries were mixed amid continued choppy action as markets anticipate tighter Fed monetary policy amid the backdrop of persistent inflation and signs of slowing economic growth.

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