A higher-than-expected inflation report triggered a sell-off on Friday, leaving stocks in the red for the week.
The Dow Jones Industrial Average lost 4.58%, while the Standard & Poor’s 500 dropped 5.05%. The Nasdaq Composite index slid 5.60% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, declined 1.81%.1,2,3
Inflation Upends Stocks
Stocks gyrated between gains and losses last week until sliding lower on Friday’s hot inflation report, which heightened worries over a more aggressive Fed and a further economic slowdown. Stocks moved higher to begin the week, despite rising bond yields, a profit warning from a major retailer, and Senate testimony by Secretary of Treasury Janet Yellen, who said that inflation was likely to remain elevated.
Stocks turned lower later in the week on renewed concerns of an economic slowdown, sparked by a downward revision in The Federal Reserve-Atlanta’s real-time estimate of second-quarter GDP growth and a drop in new mortgage applications. Investors lightening up on stocks ahead of Friday’s inflation report may have also contributed to Thursday’s selling.
Consumer prices rose 8.6% year-over-year in May, marking the highest rate since December 1981. Price increases over the last 12 months were driven by a 34.6% jump in energy prices and by food costs, which climbed 10.1%. Used car and truck prices, which had seen three straight months of declines, rose 1.8% from April, while airfares soared 12.6% in May.4
May’s inflation exceeded economists’ forecasts and dashed the hopes that inflation had plateaued. In a separate economic report on Friday, real wages (net of inflation) fell 0.6% in April and were lower by 3% from 12 months ago.5
This Week: Key Economic Data
Tuesday: Producer Price Index.
Wednesday: Retail Sales. FOMC Announcement.
Thursday: Jobless Claims. Housing Starts.
Friday: Industrial Production. Index of Leading Economic Indicators.
Source: Econoday, June 10, 2022
This Week: Companies Reporting Earnings
Thursday: Adobe, Inc. (ADBE), The Kroger Co. (KR).
Source: Zacks, June 10, 2022
A Checklist of Common Errors When Preparing Your Tax Return
Properly preparing your tax return can be tricky, but here are some tips to help you avoid common errors:
* This information is not intended to be a substitute for specific, individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov6
What is Mindfulness?
You may have heard various definitions of mindfulness here and there or have your own ideas about what it is. Do you completely clear your mind? Is there more to it?
Interestingly, mindfulness is as simple as it sounds. It refers to the state of being fully present in where you are and what you’re doing. You can practice mindfulness as you're driving, as you’re walking your dog, or as you’re playing with your children. It’s practicing being in the here and now and not letting your mind take you out of the present moment. These obsessive thoughts can lead to anxiety and stress.
To practice mindfulness, take a simple activity, like drinking your cup of coffee, and think about every sensation you’re experiencing. It takes practice but is worth it to improve your mental strength!
Tip adapted from Mindful7
"The information contained above is illustrative, provided for educational and informational purposes only, does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor."
Footnotes and Sources
2. The Wall Street Journal, June 10, 2022
3. The Wall Street Journal, June 10, 2022
4. CNBC, June 10, 2022
5. CNBC, June 10, 2022
6. IRS.gov, January 3, 2021
7. Mindful.org, July 8, 2020
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Weekly Market Insights: Stocks Dip on Inflation Report
June 13, 2022