Thursday, June 9, 2022

US Market Wrap 06/09/2022

 - After Europe's Central Bank became the latest to announce restrictive tactics to combat inflation, US equities slumped for a second day, putting economic concerns in the spotlight.

- The dollar increased in value, and Treasury yields rose.

- In the final hour of trading, selling picked up, with the S&P 500 finishing down 2.4%, the worst one-day drop in three weeks. Apple (AAPL), Meta Platforms (META), and Amazon (AMZN) all fell more than 3% in the tech-heavy Nasdaq 100 index.

- The European Central Bank made no changes to the deposit rate, but said it is prepared to raise it by a quarter-point next month and again by that amount or more if inflation, which is already above 8% in the euro region, demands a stronger stance.

- Tesla (TSLA) gained after the business said that output of cars built in China had more than tripled. The stock then lost ground as US authorities said that their investigation into the automaker's autopilot technology had been widened. State Street Corp's (STT) stock rose slightly after the company indicated it would not pursue an acquisition or a business combination with Credit Suisse Group AG (CS).

- Treasury yields decreased across most maturities in line with their European counterparts, with benchmark yields remaining above 3%. Following the ECB decision, the yield on German government 10-year bonds increased by seven basis points.

- Policymakers at the European Central Bank have lagged behind their global counterparts at the Federal Reserve, the Bank of Canada, and the Reserve Bank of Australia, which have launched vigorous campaigns to tame spiralling inflation this year, rising in 50-basis point increments.

- On the inflation front, Friday's data will be keenly scrutinised for signals as to the Fed's rate path. The data is expected to indicate that consumer prices rose from a month ago, but fell somewhat from a year ago, but remained above 8%. This will likely keep policymakers under pressure to maintain aggressive rate hikes.