Wall Street Close: All three benchmarks post mild losses as inflation anxiety escalates

  • US equities grind lower amid cautious sentiment ahead of the key US CPI.
  • US 10-year Treasury yield drops to the lowest since March.
  • GameStop declines after market on firm’s rejection to forward guidance.
  • US-China tussles escalate, challenges for tech sector identified.

Given the risk sensitivity over ahead of the key data/event, US shares remained on the back foot by the end of Wednesday’s North American trading session. The sentiment could also be traced to a lack of major catalysts even as the Sino-American tensions grow stronger.

Market’s measures of volatility, Volatility Index (VIX), dropped to the lowest in over a year amid cautious sentiment as traders await the US Consumer Price Index (CPI) amid mixed clues. Also on the wait-list is the European Central Bank’s (ECB) monetary policy meeting. The ECB is less likely to entertain markets, except for being important due to the economic guidance, whereas the battle between the early signals of the US CPI and the Fed’s rejection to reflation fears wobble investors.

It’s worth noting that the US Senate’s passage of a $200 billion bill to ward off reliance on some of the Chinese technology joins the latest push by the US antitrust lawmakers to weigh on the big technology firms to weigh on the sentiment. Even so, “meme” stocks remained volatile and so do the US bonds.

Against this backdrop, Dow Jones Industrial Average (DJI) dropped 0.44% or 152.68 points to 34,447.14 whereas S&P 500 came in second with 0.18% downside, or 7.71 points, to 4,219.55. Nasdaq also posted losses on the day, down 0.09% or 13.16 points to 13,911.75.

Drugmakers like Pfizer and Merck benefited from US President Joe Biden’s covid vaccine donation plans whereas the social-media-frenzy ace GameStop couldn’t cheer upbeat earnings, -$0.45 EPS versus -$0.71 expected, as the firm keeps refraining from forwarding guidance. Further, shares of AMC and Bed Bath & Beyond also closed lower.

It’s worth noting that the steady US Wholesale Inventories and upbeat MBA Mortgage Applications couldn’t entertain traders ahead of the week’s crucial events.

Read: US CPI May Preview: Inflation angst is coming

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