Midday Report: US Equity Indices Drop After Consumption Expenditure Grows Slower Than Forecast; Yields Dive With Crude Oil

Last Updated: Thursday, June 30, 2022 1:00 PM | MT Newswires

US equity benchmarks fell after midday on Thursday as a gauge of personal consumption expenditure climbed at half the pace forecast for May while the core inflation print advanced less than forecast.

The Dow Jones Industrial Average slid 0.4% to 30,893.2, with the S&P 500 down 0.3% to 3,807.6, and the Nasdaq Composite 0.5% lower at 11,123.6.

Energy, materials, and consumer discretionary were among the steepest decliners. All sectors barring three, industrials, real estate, and utilities, were in the red.

Personal consumption expenditures were up 0.2%, missing expectations for an increase of 0.4% and below the 0.6% gain in April. After adjustment for inflation, real PCE fell by 0.4% after a 0.3% increase in April, compared with expectations for a 0.3% decline.

The core PCE price index, which excludes the more volatile food and energy prices, increased by 0.3%, below the 0.4% gain expected. On a year-over-year basis, the rate slowed to 4.7% from 4.9% in the previous month, data from the Bureau of Economic Analysis showed.

S&P 500 earnings estimates for the year outside of the Energy sector are down 9.8% since the start of the year, a news report from Zacks said. It is reasonable to expect estimates to come down further as the economy slows in response to aggressive monetary tightening, the report said.

US stocks "slid on worries that central banks determined to tame inflation will hamper global economic growth," a research note from D.A. Davidson said Thursday.

The US 10-year yield sank by 10.6 basis points to 2.99% intraday, dipping below the psychology-important 3% mark.

The Federal Reserve "will continue an aggressive path of rate hikes, despite an increasingly challenging economic narrative," a research note from Wells Fargo said Thursday.

The West Texas Intermediate futures dived 1.8% to $107.69.

Walgreens Boots Alliance (WBA) said it expects fiscal fourth-quarter profit to lag last year's strong performance after the drug-store operator's third-quarter results topped expectations, buoyed by its UK-based Boots business. Shares dropped 4.4% intraday, among the worst performers on the Dow, S&P 500, and Nasdaq.

RH (RH) cut its full-year net sales forecast within a month of setting it out. The luxury home-furnishings group expects revenue to fall from a year ago as demand will continue slowing in a rising interest-rate environment. Shares sank 9.6% intraday.

Gold was down 0.3% to $1,811.20 per troy ounce, while silver was down 1.7% to $20.38 per ounce.

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