U.S. stocks tumbled late Thursday to close sharply lower, with the Nasdaq skidding 2.8%, as jittery investors looked ahead to a reading on May inflation due Friday morning.
The Dow Jones Industrial Average
tumbled 638.11 points or 1.9%, to close at 32,272.79
The S&P 500
skidded 97.95 points, or 2.4%, ending at 4,017.82.
The Nasdaq Composite
shed 332.05 points, or 2.8%, finishing at 11,754.
The Dow, S&P 500 and Nasdaq all booked their worst daily percentage drops since May 18, according to FactSet data.
What drove markets?
Investors were nervous about a potential slowdown in economic growth in the wake of the Federal Reserve’s monetary policy tightening, with the May consumer-price index report due Friday.
Supply disruptions tied to the pandemic and the war in Ukraine, along with a revival in consumer demand for services rather than goods, have pushed prices up at the fastest pace in about 40 years.
The consumer-price index is expected to show a large 0.7% increase when the report is released Friday morning — more than double the gain in the prior month. In April, the yearly rate fell for the first time in eight months to 8.3%. The prior 8.5% reading in March was the biggest since December of 1981.
“Here’s what I expect: I think goods inflation comes down a bit, but services come up a bit,” said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research, by phone.
In U.S. economic data Thursday, total household net worth fell $5.4 billion to $149.2 trillion in the first quarter, according to Fed data. It was the first drop after seven straight quarters of expansion, coming as the value of stockholdings tumbled in 2022, but as home values continued to add gains.
Also, the number of Americans filing for unemployment insurance showed more newly jobless workers asking for benefits than at any time during the past five months. New filings for unemployment benefits jumped by 27,000 last week to a five-month high of 229,000, but almost the entire increase appeared to stem from seasonal quirks tied to the Memorial Day holiday.
Earlier Thursday, U.S. stocks followed European equities lower, after the European Central Bank affirmed that next month it would halt asset purchases and raise interest rates for the first time in more than a decade.
“Inflation and the Fed’s quantitative tightening plan to throttle it, are the consensus leading concerns in the market right now,” Louis Navellier, founder of Navellier & Associates, wrote in a daily client note.
He also noted that stocks have remained in a holding pattern lately, but echoed JPMorgan Chase & Co
CEO Jamie Dimon’s warning of: “Brace yourself,” for volatility after Friday’s data release.
Companies in focus
U.S.-listed shares of Credit Suisse Group AG
closed 5.1% lower after State Street Corp.
said it was not pursuing an acquisition of, or any business combination with, the Switzerland-based bank.
Walt Disney Company
shares shed 3.8% after the company said it was tapping Dana Walden as chairman of Disney General Entertainment Content, where she will succeed Peter Rice, one of the company’s top television executives.
was one of the market’s best performers, rising 4%, on reports of a potential takeover by Samsung.
Shares of several COVID vaccine makers slumped Thursday, including Moderna,
The latter shed 17.2% on worries that the FDA might delay approval of its booster shot.
Other market action
The U.S. dollar
gained against a basket of rival currencies, up 0.8%.
Treasury yields rose, with the 10-year
up 1.3 basis points to 3.041%, holding above the critical 3% threshold.
Crude oil prices
eased on Thursday following Wednesday sharp move higher, as front-month futures for WTI crude, the U.S. benchmark, fell 0.5% to settle at $121.51 per barrel.
––Steve Goldstein contributed reporting to this article