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US STOCKS-Wall St falls as growth stocks struggle with inflation reading in focus

reuters.com · 06/09/2022 12:38
US STOCKS-Wall St falls as growth stocks struggle with inflation reading in focus

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10-Year Treasury yield up at 3.04%; Brent above $123 a barrel

Tesla gains on surge in China sales, UBS upgrade

Indexes down: Dow 0.52%, S&P 0.64%, Nasdaq 0.75%

Adds comment, details; updates prices

By Devik Jain and Mehnaz Yasmin

- Wall Street's main indexes fell in choppy trading on Thursday, as growth and bank stocks slipped amid weaker risk appetite ahead of a closely watched inflation report this week.

Nine of the 11 major S&P sectors traded lower, with energy .SPNY, financials .SPSY and materials .SPLRCM down 1% each. Consumer staples .SPLRCS and consumer discretionary sectors .SPLRCD edged higher.

Apple Inc AAPL and Amazon.com AMZN declined 1%, dragging the S&P 500 and the Nasdaq indexes lower. Bank of America BAC tumbled 2.5%, while the broader banks index .SPXBK shed 1.7%.

Rate-sensitive growth stocks are under pressure as the benchmark U.S. 10-year Treasury yield US10YT=RR climbed to as much as 3.07%, its highest level since May 11.

Inflation worries came to the fore ahead of the U.S. consumer price index (CPI) report on Friday as Brent crude prices LCOc1 rose above $123 a barrel.

"There is a straight line read from higher prices at the pump for the U.S. consumer to higher U.S. inflation," said Huw Roberts, head of analytics at Quant Insight.

"The hope was that Friday's CPI report would be ammunition for the peak inflation argument and the crude oil move is upsetting that."

Consumer prices are expected to have risen 0.7% in May, while the core consumer price index, which excludes the volatile food and energy sectors, rose 0.5% in the month.

Investors fear a hot reading on inflation could keep the U.S. Federal Reserve on its path to raise interest rates aggressively against the backdrop of a volatile stock market, strong consumer spending and tight labor conditions.

The U.S. central bank has raised its short-term interest rate by three-quarters of a percentage point this year and intends to keep at it with 50 basis points increases at its meeting next week and again in July. nL1N2XN28A

"Right now, we are at the confluence of four headwinds - a slowdown in economic growth rate in the United States, Fed tightening monetary policy, a rise in interest rates and a red hot inflation," said David Sekera, chief U.S. market strategist, at Morningstar.

At 12:11 p.m. ET, the Dow Jones Industrial Average .DJI was down 172.65 points, or 0.52%, at 32,738.25, the S&P 500 .SPX was down 26.40 points, or 0.64%, at 4,089.37, and the Nasdaq Composite .IXIC was down 90.96 points, or 0.75%, at 11,995.31.

Alibaba Group BABA.N slid 7.9% after its affiliate Ant Group said it has no plan to initiate an initial public offering. nP8N2XM024

Tesla Inc TSLA rose 2.2% as the electric automaker sold 32,165 China-made vehicles last month, up sharply from 1,152 in April. Brokerage UBS upgraded the stock to "buy" and raised its profit estimates for the next three years. nL4N2XW1P7 nL1N2XW0HP

NXP Semiconductors NXPI jumped 6.1% on report Samsung Electronics SSNGY plans to acquire the Dutch chipmaker. nL1N2XW1O2

Declining issues outnumbered advancers for a 3.82-to-1 ratio on the NYSE and for a 2.51-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week highs and 30 new lows, while the Nasdaq recorded 13 new highs and 82 new lows.

(Reporting by Devik Jain and Mehnaz Yasmin in Bengaluru and Chuck Mikolajczak in New York; Editing by Arun Koyyur and Sriraj Kalluvila)