Stock Market News | Wells Fargo Investment Institute

Closing Comment — Monday, May 16, 2022

DJIA: 32,223.42, up 26.76
S&P 500: 4,008.01, down 15.88
Nasdaq: 11,662.79, down 142.21

Stocks mixed on growth worries; yields dip

U.S. stocks finished mixed on Monday as Wall Street grappled with economic growth concerns. The major averages wavered ahead of tomorrow’s update on retail sales, along with remarks from Federal Reserve (Fed) Chair Jerome Powell. Some high-profile retail earnings will also be in focus. The S&P 500 dipped 0.4% on the heels of its longest weekly losing streak since June 2011. The Nasdaq Composite retreated 1.2%, having dropped more than 27% from its November 19 peak. The Dow added 26 points following a seventh consecutive weekly drawdown--its worst stretch since 2001. Treasuries caught a bid, with the yield on the 10-year note down six basis points (0.06%) to 2.88%.

In commodities, West Texas Intermediate crude climbed 3.3% to $114.09/barrel despite disappointing data out of China. Both industrial production and consumer spending in the world’s second largest economy fell to the lowest levels since the start of the pandemic amid ongoing COVID-19 lockdowns. Domestically, the New York Fed empire manufacturing survey unexpectedly contracted for the second time in three months.

Seven of 11 S&P 500 sectors closed in negative territory, with Consumer Discretionary shares losing the most. Energy outperformed, while the more traditionally defensive groups also bucked the downtrend. In corporate news, Twitter Inc. shed 8.2% on worries Elon Musk may not complete his takeover deal of the social media company. Elsewhere, Eli Lilly and Co. gained 2.7% after its Type 2 diabetes drug was granted approval by the FDA (Food and Drug Administration). In M&A news, Spirit Airlines Inc. rallied 13.5% after JetBlue Airways Corp. announced a tender offer to purchase its competitor for $30 per share.

Midday Comment — Monday, May 16, 2022

DJIA: 32,212.61, up 15.95
S&P 500: 4,016.79, down 7.10
Nasdaq: 11,734.69, down 70.31

Stocks mixed on economic growth worries

U.S. stocks are fluctuating near mid-session Monday as Wall Street weighs global economic growth concerns. Investors are digesting disappointing data out of China, along with some reduced gross domestic product (GDP) forecasts for the U.S. and Europe. The S&P 500 is down 0.2%, now 16.2% below its January 3 record. The broad benchmark just suffered its sixth straight weekly decline, its longest such losing streak since June 2011. The Nasdaq Composite is sliding 0.6%, having dropped nearly 27% from its November 19 peak. The Dow is adding 15 points, attempting to bounce back from its seventh consecutive weekly drawdown--its worst stretch since 2001. Amid the cautious tone, Treasuries are continuing to catch a bid. The yield on the 10-year note is down nine basis points (0.09%) to 2.85%.

Six of 11 S&P 500 sectors are trading in negative territory, with growth-related shares losing the most. The more traditionally defensive groups are bucking the downtrend. In corporate news, Twitter Inc. is shedding 5.9% on worries Elon Musk may not complete his takeover deal of the social media company. Breadth is positive on issues by 11:8 on the NYSE and 7:6 on the Nasdaq. Composite NYSE volume is greater than 1.9 billion shares.

Overseas, both industrial production and consumer spending in China fell to the lowest levels since the start of the pandemic amid ongoing COVID-19 lockdowns. Domestically, the New York empire manufacturing survey unexpectedly contracted for the second time in three months, with the reading dipping to -11.6 in May from the prior 24.6 print.

Opening Comment — Monday, May 16, 2022

DJIA: 32,196.66, up 466.36
S&P 500: 4,023.89, up 93.81
Nasdaq: 11,805.00, up 434.04

Stocks lower amid growth worries

U.S. futures are pointing to a lower open Monday as a perceived risk off tone looks to persist on Wall Street. The Dow is dipping 0.1%, while the S&P 500 is down 0.3% in pre-market action. The Nasdaq 100 is trading 0.4% below fair value on the GLOBEX. Concerns surrounding the global economic growth outlook continue to dampen sentiment. Investors are monitoring disappointing data out of China, along with some reduced gross domestic product (GDP) forecasts for the U.S. and Europe. U.S. stocks did stage a relief rally on Friday (May 13), consolidating amid another downbeat week. As has been the case lately, the bounce was widely attributed to oversold conditions after the S&P 500 came within a hair’s breadth of bear market territory (defined as a 20% drawdown from a recent peak) on Thursday (May 12). The broad benchmark’s 2.4% rally on Friday was not enough to prevent a sixth straight losing week (-2.4%), its worst run since June 2011. The Nasdaq Composite trimmed its five-day decline to 2.8%, while the blue chip Dow suffered its seventh straight weekly drop--its worst such stretch since 2001.

This week, corporate earnings from America’s biggest retailers headline the slate. Walmart Inc. (WMT) posts its profit tally before the opening bell tomorrow, while Target Corp.’s (TGT) results hit the tape Wednesday morning. Home improvement retailers Home Depot Inc. (HD) and Lowe’s Cos Inc. (LOW) are also likely to be in the spotlight, along with department stores TJX Cos Inc. (TJX), and Ross Stores Inc. (ROST). In the Tech sector, Cisco Systems Inc. (CSCO) and Applied Materials Inc. (AMAT) will deliver corporate confessions. Elsewhere, Deere & Co. (DE) reports on Friday.

On the data front this morning, the New York Federal Reserve’s (Fed) empire manufacturing survey is anticipated to have eased in May, with the reading likely deteriorating to 15.0 from last month’s 24.6 print. Meanwhile, an update on U.S. retail sales should be closely watched tomorrow, with the release forecasted to reflect a 1% advance in April, versus the prior month’s 0.7% gain. In the real estate realm, market participants will receive a flurry of updates, including reports on homebuilder sentiment, building permits, housing starts, and existing home sales. Other notable economic releases this week include the Philadelphia Fed’s business outlook and the leading index of economic indicators. In the central bank space, several Fed leaders are slated to deliver remarks, including New York Fed President John Williams today.

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