Stocks fall as inflation worries persist

Stocks fall as inflation worries persist

US stocks fell on Wednesday, with the S&P 500 and Dow paring gains after rising for consecutive sessions.

The S&P 500 fell more than 1% on Wednesday, while the Dow and S&P 500 lost more than 0.7%. The small-cap Russell 2000 was the biggest laggard of the day, falling more than 1.5% to session lows. All three major averages had started this week with gains, rising on both Monday and Tuesday.

West Texas Intermediate (CL=F) crude prices rose above $122 a barrel to hit the highest level since February, and the benchmark US 10-year Treasury yield resumed its rise above 3%.

Shares of Scott’s Miracle-Gro Company ( SMG ) sank after the company became one of the latest retailers to cut guidance after building more inventory than its end users demanded.

Among the individual gains on Wednesday were streaming company Roku ( ROKU ), which gained more than 9% after an insider report suggested Netflix ( NFLX ) might explore a bid for the company

Shares of Spotify ( SPOT ) also gained more than 6% after the company’s investor day.

Despite gains in the first week, major US stock indexes remained broadly choppy as investors weighed individual corporate warnings about inflation and the macroeconomic backdrop against policymakers’ efforts to reduce the high prices.

The Federal Reserve remains in a quiet period ahead of its next policy-setting meeting next week, which overwhelmingly it is expected to set the stage for the central bank to introduce a second interest rate hike of 50 basis points.

And other policymakers also reaffirmed that cooling candida inflationary pressures remains a key priority. U.S. Treasury Secretary Janet Yellen told senators on Tuesday that she expected inflation to remain high and reiterated that she believed price increases were driven by Russia’s war in Ukraine, the shift in the from the pandemic to the procurement of goods and ongoing supply chain issues.

“Watching the market … as it moves between advancing and retreating suggests that until there is a more definitive reading on the inflation front along with the Fed’s thinking about further rate hikes in September, we can expect this bounce back and forth,” Quincy Krosby, chief equity strategist at LPL Financial, said in an email.

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“Given the uncertainty the market has to discount, and especially how corporate earnings will fare as the economy slows further, having a market that wobbles around a bit before making up its mind is probably the healthier path, at least for now.” Krosby added.

The Bureau of Labor Statistics is set to release its latest consumer price index on Friday, which is expected to show that inflation eased only marginally in May from a high rate of 8.3% in April. Consensus economists are looking for headline inflation to rise to an annual rate of 8.2% for May and 5.9% excluding food and energy prices.

4:02 PM ET: Stocks break winning streak on Wednesday

Here were the main market moves at the close of trading on Wednesday:

S&P 500 (^GSPC): -44.96 (-1.08%) to 4,115.72

Dow (^DJI): -269.76 (-0.81%) up to 32,910.38

Nasdaq (^IXIC): -88.96 (-0.73%) up to 12,086.27

Crude (CL=F): +$3.02 (+2.53%) to $122.43 per barrel

Gold (GC=F): +$3.50 (+0.19%) to $1,855.60 per ounce

10-year treasury (^TNX): +5 bp for a return of 3.0290%

11:46 am ET: Roku shares soar on reports that Netflix is ​​in talks to acquire the company

Shares of Roku ( ROKU ) rose more than 12% intraday Wednesday amid speculation that the company was in talks to be acquired by Netflix ( NFLX ). Netflix shares also rose on the day.

Insider first reported on Wednesday that internal discussions were taking place for the deal. Spokespeople for Roku and Netflix told Yahoo Finance that they would not comment on rumors or speculation.

However, some major Wall Street firms have already cast doubt on this link. In a note Wednesday morning, JPMorgan’s Cory Carpenter and Doug Anmuth called the acquisition “highly unlikely” as it would represent a massive shift to ad-supported video content at Netflix.

“The NFLX’s advertising efforts are still in the early stages,” the analysts wrote. “We would be surprised if NFLX made an acquisition of this magnitude, essentially switching the platform from ad-free to ‘all-in’ to AVOD for several months. We don’t think that would be well received by NFLX shareholders. .”

“We believe NFLX is more likely to build its advertising offering on its own or through smaller M&A deals, similar to its gaming effort,” they added.

10:04 am ET: Scotts Miracle-Gro is the latest company to cut its outlook

Lawn giant Scotts Miracle-Gro ( SMG ) cut its guidance on Wednesday.

In a release before market openScotts cut its sales and profit outlook for 2022 citing, among other factors, “a fluid and rapidly evolving market.”

Scotts shares fell as much as 8% in early trading.

The company now expects adjusted earnings to be between $4.50 and $5.00 per share.

In its report released May 3, the company said its full-year EPS forecast of $8.00 per share “is likely unattainable.” With this latest update, Scotts forecasts full-year adjusted EPS of about half of the previous target.

Last month, Scotts cited “bad” weather in most markets as having a negative impact on sales, although the company said on Wednesday that some of that softness has recovered.

“While there is enough time left in the year to see continued improvement in our controls and landscaping categories, this is not likely to be the case for the majority of products in our lawn care portfolio,” he said scotts wednesday

In addition, Scotts also said that its retail partners — think national outlets like Home Depot ( HD ) or Tractor Supply ( TSCO ) as well as your local garden store — didn’t replenish orders over the past weeks at the pace that the company could have. I expected.

“In fact, retailer orders were more than $300 million below our plans for the month in the US consumer segment alone,” the company said. “This surprising trend has put significantly greater pressure on our fixed cost structure which, together with the raw material cost increases we have experienced since the start of the war in Ukraine, will leave us well below of the revised financial targets we set in Ukraine. March.”

“The changes we’ve seen since our last public comments in early May are clearly not what we would have expected,” Scotts CEO Jim Hagedorn said. “The revised guidance we’re providing is our best estimate of where things currently stand in a fluid and fluid market. While we strive to deliver the best result for fiscal 2022, the our focus is shifting to the future. We are committed to taking decisive action to improve our margins and cash flow in fiscal 2023 and return the business to a level of performance that our shareholders rightly expect.”

With this release, Scotts becomes the latest major company to revise its outlook and say, in essence, that it’s not entirely sure where things are headed. And Q2 earnings season is still more than a month away.

—Myles Udland, Senior Markets Editor

9:32 am ET: Stocks open lower, paring overnight losses

Here were the top market moves as of 9:32 a.m. ET:

S&P 500 (^GSPC): -27.54 (-0.66%) to 4,133.14

Dow (^DJI): -225.92 (-0.68%) to 32,954.22

Nasdaq (^IXIC): -65.15 (-0.54%) to 12,110.08

Crude (CL=F): +$0.90 (+0.75%) to $120.31 a barrel

Gold (GC=F): +$4.50 (+0.24%) to $1,856.60 per ounce

10-year treasury (^TNX): +5 bp to get 3.0220%

7:07 am ET: Stock futures fall

Here’s where the markets were trading before the opening bell on Wednesday morning:

S&P 500 futures (IS=F): -12.5 points (-0.3%) to 4,146.25

Dow futures (YM=F): -123 points (-0.37%) up to 32,042.00

Nasdaq Futures (NQ=F): -17.5 points (-0.14%) up to 12,694.00

Crude (CL=F): +$1.27 (+1.06%) to $120.68

Gold (GC=F): -$2.60 (-0.14%) to $1,849.50 per ounce

10-year treasury (^TNX): +3.9bp for a return of 3.009%

7:00 am ET: Mortgage applications fall for fourth straight week, hitting lowest level in more than two decades

U.S. mortgage applications fell further last week as high home prices and rising interest rates dragged down purchase and refinance activity to the lowest level in more than two decades

Mortgage loan application volume in the Mortgage Bankers Association’s weekly market composite index sank 6.5% in the period ending June 3. This represented a fourth straight weekly decline and extended a 2.3% drop from the previous week. Applications for refinancing fell 6% weekly and 75% compared to the same time last year. Purchases, on the other hand, fell by 7% compared to the previous week and, in seasonally adjusted terms, were lower by 21% compared to last year.

“Weakness in both purchase and refinance applications pushed the market index to its lowest level in 22 years. The 30-year fixed rate rose to 5.4% after three consecutive declines. Although while rates were still lower than four weeks ago, they remained high enough to suppress refinancing activity,” said Joel Kan, associate vice president of economic and industry forecasting at MBA, in a news release.

“The buying market has suffered from persistently low housing inventory and the jump in mortgage rates over the past two months,” Kan added. “These worsening affordability challenges have been especially tough on potential first-time buyers.”

NEW YORK, NEW YORK – JUNE 3: Traders work on the floor of the New York Stock Exchange (NYSE) at the start of the trading day on June 3, 2022 in New York City. A new jobs report released this morning by the Labor Department shows employers added 390,000 jobs in May. Stocks pointed lower before the opening bell on Friday, sending indexes back into the red for the week. (Photo by Spencer Platt/Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.

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About the Author: Chaz Cutler

My name is Chasity. I love to follow the stock market and financial news!