Dow Jones cut early losses; S&P 500, Nasdaq turn positive

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The stock market action is volatile Thursday, as the major averages returned to negative territory in early-afternoon action. A midday rally attempt failed, leaving stocks lower once again.

The Nasdaq (COMP.IND) is -0.6%, down 74 to 11,291, S&P (SP500) is -0.8%, down 32 to 3,903 and the Dow (DJI) -0.8%, down 258 points to 31,576.

Some names that have plunged lately, like Carvana and Peloton, continue to show notable strength. However, others, like Coinbase, have returned their earlier gains.

Just two of 11 S&P sectors are higher. Consumer Discretionary is on top with Etsy, the biggest 2022 decliner, leading. Communication Services is also up, helped by hard-hit Dish Network and Netflix.

Rates fell a little further after April’s PPI rose 0.5% as expected and the core rate rose 0.4%, lower than forecasts. The headline annual rise dropped to 11% but was above expectations.

The 10-year Treasury yield is off 7 basis points to 2.85%. The 2-year is down 5 basis points to 2.58%.

“A surprise 0.5% drop in the trade services component, which measures retail and wholesale margins, constrained the April core m/m,” Pantheon Macro said. “As a result, overall core services prices were unchanged. The decline in margins in April was broad, including healthcare, furniture retailing, auto dealers, and hotels. The trend in margins seems still to be rising, but the rate of increase has slowed from the peak last spring and summer, so the y/y rate is set to decline.”

The firm added: “This matters because the huge expansion in margins since Covid struck has been a key part of the surge in consumer inflation. A sustained decline in margins would change the overall inflation picture, but a decline in one month is not definitive.”

“Overall, markets appear to be oscillating between three sometimes competing concerns: inflation, recession and stagflation,” Goldman Sachs said.

The crypto selloff continues, with bitcoin down this morning.

Among stocks, Disney is down despite strong streaming additions and positive analyst commentary. Taesptry is the biggest S&P gainer after its results.