Friday, June 10, 2022

US Market Wrap 06/10/2022

After an unexpectedly hot reading in consumer prices fueled bets that the Federal Reserve will have to step up its battle against inflation, US stocks fell the most in three weeks, and Treasury yields spiked higher.

The S&P 500 fell 2.9%, ending the second-worst week of the year and the ninth weekly drop in the last ten, as investors worried that efforts to combat inflation would stifle growth.

The tech sector bore the brunt of Friday's rout, with the NASDAQ 100 falling more than 3%. From Cathie Wood's flagship ETF to software developers and chipmakers, growth stocks have plummeted.

A separate report revealed that consumer sentiment hit a new low in early June, putting pressure on the stocks of airlines, casinos, and hotels.

Two-year yields topped 3% in the treasury market, a level not seen since 2008, while the move in short rates left 30-year yields lower than those on five-year notes, signalling the risk that tightening will slow growth.

Bitcoin fell below $30,000 again, the CBOE volatility index rose to 29, and the dollar advanced.

Rates traders increased their bets on Fed hikes, with three half-point increases now expected at policy meetings in June, July, and September, according to market-derived prices. When the Fed meets next week, it is expected to raise interest rates by 50 basis points.