US Markets Fall As Tech Stocks Under Pressure
2:43 pm Wednesday, June 08th, 2022
The stock market has found it difficult to build on yesterday’s gains, having to contend with another worrisome rise in energy prices and a batch of headlines playing into its concerns about growth prospects.
Briefly, WTI crude futures are up 2.6% to $122.50/bbl and natural gas futures are up 2.8% to $9.55/mmbtu.
Those moves have undercut transportation stocks; and they continue to foment concerns about a slowdown in consumer spending activity and pressures on corporate profit margins. The major indices slid to their lows for the day as oil prices cracked above $122.00/bbl.
The Dow Jones Transportation Average is down 3.3%, serving as a guidepost today for general worries about the growth outlook. Other posts include the underperformance of the Philadelphia Semiconductor Index (-2.5%), and the financial (-1.6%), industrials (-1.5%), materials (-1.7%), and real estate (-1.5%) sectors.
Several other headlines have helped set today’s cautious-minded tone:
Scotts Miracle-Gro (SMG) slashed its FY22 (Sep) EPS outlook well below the current consensus estimate, noting its fixed cost structure has seen significantly greater pressure due to replenishment orders from its retail partners not being what it expected since mid-May.
Intel (INTC) said the macro environment has been weaker and that circumstances at this point are much worse than it had anticipated coming into the quarter.
The OECD cut its 2022 global GDP view to 3.0% from 4.5%.
The Atlanta Fed’s GDPNow model estimate for Q2 was lowered to 0.9% from 1.3%.
The Reserve Bank of India raised its key lending ate by a larger-than-expected 50 basis points to 4.90% (a 40 bps increase was expected), following suit with the Reserve Bank of Australia’s larger-than-expected rate hike on Tuesday.
The MBA Mortgage Applications Index was down 6.5% week-over-week, driven by a 7% decline in purchase applications and a 6% decline in refinancing applications.
In general, large-cap stocks have fared better today than small-cap and mid-cap stocks, although the major indices are all lower at this point. The mega-cap stocks have shown some relative strength, but they have not been entirely immune from selling pressure. The Vanguard Mega-Cap Growth ETF (MGK) is down 0.5% versus a 1.1% decline for the Invesco S&P 500 Equal Weight ETF (RSP).
MBA Mortgage Applications declined 6.5% week-over-week versus a prior decline of 2.3%; purchase applications fell 7% and refinancing applications dropped 6%.
April Wholesale Inventories increased 2.2% month-over-month (consensus 2.1%) following an upwardly revised 2.7% increase (from 2.3%) in March.
