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Stock Market Today: Dow Extends Losing Streak as Fed, Inflation Jitters Bite

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© Reuters.

By Yasin Ebrahim

Investing.com – The Dow extended its losing streak Thursday as an intraday reprieve was quickly reversed by selling pressure amid ongoing worries the Federal Reserve’s plan to curb inflation could tip the economy into recession. 

The Dow Jones Industrial Average fell 0.3%, or 103 points, to close in the red of the sixth-straight day. The S&P 500 slipped 0.05%, and the Nasdaq rose 0.1%.

Tech closed above its lows of the session, as dip-buyers appeared to test waters following an intense selling intraday, but the appetite for big bullish bets on the sector remains sidelined by fears that elevated inflation will keep the Federal Reserve on a hawkish rate hike path.

Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) led the decline in big tech. Semiconductor stocks helped steady tech, however, as AMD (NASDAQ:AMD) and NVIDIA (NASDAQ:NVDA) cut the bulk of their losses. 

Producer price index for final demand increased 0.5% last month, in line with economists’ forecasts, and rose 11% for the 12 months through November, exceeding expectations for a 10.7% increase.

“Nothing in yesterday’s or today’s report suggests the Committee will deviate from the implied increase of 50bps on June 15, although some are beginning to reconsider the possibility of 75bp increase,” Stifel said in a note.

Financials also participated in the broader market selloff, under pressure from banking stocks as Treasury yields continued to lose ground on jitters about the global growth outlook.

Signature Bank (NASDAQ:SBNY), Citigroup (NYSE:C) and Synchrony Financial (NYSE:SYF) were among the biggest decliners, with the latter down more than 6%.

Wolf Research downgraded Synchrony Financial to underperform from peer perform, citing a deteriorating credit outlook.

Energy stocks pared losses to end just above the flatline following volatile action in oil prices as investors continue to weigh up the risk of a weaker demand backdrop against potential supply shortages.

The earnings front, meanwhile, served up mixed quarterly results.

WeWork (NYSE:WE) narrowed its losses in the first quarter as a rebound in demand for office space following the pandemic-induced slump, sent its shares more than 10% higher.

Walt Disney (NYSE:DIS), meanwhile, reported quarterly results that missed on both the top and bottom lines, but streaming was a bright spot for the company as it topped 200 million subscribers. The stock ended the day down less than 1%.

Beyond Meat (NASDAQ:BYND) fell more than 4% after reported a wider loss than expected as rising costs dented margins.

“With increasing competitive pressures, challenges in scaling the business, and intermediate-term capital needs, we believe investors should stay on the sidelines,” Oppenheimer said in a note.  

Rivian Automotive (NASDAQ:RIVN) jumped nearly 18% despite reporting weaker-than-expected quarterly results.

“This quarter [for Rivian] was not without issues, but it does finally appear that Rivian is on the right track with strong demand and a supply chain that should produce 25k deliveries this year reaffirming its guidance,” Wedbush said in a note.

The latest dip in markets has many debating whether stocks are close to reaching a bottom.

Some on Wall Street have earmarked the 30-month moving average near 3,800 for the S&P 500 as the level that could attract dip buyers, but remain wary of suggesting that a bottom is close.

“[W]e still believe the U.S. equity markets are closing in on a significant low for the year, but again this process may take more time and see more damage done before that materializes,” Janney Montgomery Scott said.

Stock Markets

Dow Futures Tick Lower After Wall Street Sell-off Intensifies

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© Reuters.

By Oliver Gray 

Investing.com – U.S. stock futures were trading lower during Wednesday’s evening deals, after major benchmark averages finished the regular session sharply lower, with the Dow Jones Industrial Average posting its biggest loss since 2020 after retail earnings indicated rising inflation pressures weighing on corporate profits.

By 6:42pm ET (10:42pm GMT) Dow Jones Futures and S&P 500 Futures were each trading 0.1% lower while Nasdaq 100 Futures fell 0.2%.

In extended deals, Cisco Systems Inc (NASDAQ:CSCO) dipped 12.9% after results as the as the company forecasted a surprising decline in revenue for the current quarter. Q3 EPS came in at 87 cents versus 86 cents expected while revenue came in at $12.8 billion versus estimates of $13.34 billion.

Bath & Body Works Inc. (NYSE:BBWI) fell 6% after reporting, as the company forecasted lower-than-expected second-quarter earnings. Q1 EPS of 64 cents versus 53 cents expected on revenues of $1.45 billion versus $1.44 billion expected.

Synopsys Inc (NASDAQ:SNPS) gained 3.5% as the company reported Q2 EPS of $2.50 versus $2.37 expected on revenues of $1.28 billion versus estimates of $1.26 billion.

During Wednesday’s regular trade, the Dow Jones Industrial Average shed 1,164.52 points, or 3.57%, to close at 14-month lows of 31,490.07 and posting its largest daily losses since June 2020. The S&P 500 traded 4.04% lower to 3,923.68 while the NASDAQ Composite dropped 4.73% to 11,418.15.

Among stocks, Target Corporation (NYSE:TGT) shares tumbled 24.9% Wednesday after the retailer reported first-quarter earnings that were much lower than Wall Street estimated due to rising costs for fuel and compensation.

Major tech companies were also hit amid the sell-off with Block Inc (NYSE:SQ) down 3.2%, Amazon.com Inc (NASDAQ:AMZN) falling 7.2%, Microsoft Corporation (NASDAQ:MSFT) dipping 4.8% and Apple Inc (NASDAQ:AAPL) down 5.6%.

On the bond markets, United States 10-Year rates were at 2.884%.

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Stock Markets

New York Times pauses return to office for workers

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© Reuters. FILE PHOTO: The New York Times building is seen in Manhattan, New York, U.S., August 3, 2020. REUTERS/Shannon Stapleton

(Reuters) – The New York Times Co said on Wednesday it is pausing its plan to ask employees to return to office as COVID-19 cases rise in the United States.

Employees of the company, headquartered in New York City, were previously set to return to office in June.

The United States is averaging nearly 97,000 new cases a day, up from about 73,000 a week ago, according to a Reuters tally, with New York City raising its COVID-19 alert level to high on Tuesday.

“Based on the city’s guidance and the advice of our health experts, we are pausing the start of our Expected Phase of return to office until conditions improve,” the company said in a note sent to its staff.

The company also said it strongly recommends that employees wear masks in common areas at its facilities, including elevators, meeting rooms, restrooms and pantries, where social distancing is not possible

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Hedge fund Melvin Capital tells investors it plans to shut down -letter

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© Reuters. FILE PHOTO: A Wall Street sign is pictured outside the New York Stock Exchange in New York, October 28, 2013. REUTERS/Carlo Allegri

2/2

By Svea Herbst-Bayliss

(Reuters) – Hedge fund manager Gabe Plotkin, who boasted one of Wall Street’s best investing records, on Wednesday told investors that he is shutting down his firm, Melvin Capital, after it suffered billions of dollars in losses.

“The appropriate next step is to wind down the Funds by fully liquidating the Funds’ assets and accounts and returning cash to all investors,” Plotkin wrote in a letter reviewed by Reuters on Wednesday.

Melvin Capital had $7.8 billion in assets at the end of April and the fund had lost 23% since January, a person familiar with the fund’s finances said.

This year’s losses come on the heels of steep losses in 2021 when Melvin Capital ended the year down 39%. The firm bet that shares of GameStop (NYSE:GME) would tumble but was battered when retail investors took the other side and sent the stock surging.

The firm had $12.5 billion in assets at the start of 2021.

In the letter Plotkin said he had already raised a substantial amount of cash and cut the funds’ exposure.

A spokesman for Plotkin declined to comment.

At the end of the first quarter Melvin’s biggest investments included bets on Live Nation Entertainment (NYSE:LYV), Hilton Worldwide Holdings (NYSE:HLT), Amazon (NASDAQ:AMZN) and Datadog (NASDAQ:DDOG). Their stock prices have fallen sharply in the last weeks, sparking speculation that a hedge fund might be trying to unwind positions.

Plotkin was a star investor at Steven A. Cohen’s hedge fund SAC Capital Advisors and launched his own firm after SAC pleaded guilty to criminal insider trading charges. Melvin Capital quickly attracted attention and powerful investors and ended 2020, the year the pandemic began, with gains of 52.5%.

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