Dow sinks more than 600 points as US stocks tumble ahead of key May inflation report

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  • Losses in US stocks accelerated on Thursday as investors await results from a key May inflation report.

  • Economists expect Friday’s CPI reading to show the rate held steady at 8.3% in May, with core inflation cooling to 5.9% from 6.2% in April.

  • Any signs of peak inflation could cause a relief rally in the stock market, while high inflation is likely to put pressure on stocks.

US stocks fell on Thursday, with losses accelerating near the end of the day as investors await a highly anticipated May inflation report.

Friday’s consumer price index report will reveal if prices continued to rise last month. Economists surveyed by Bloomberg expect the CPI to have been unchanged at 8.3% in May, and expect core inflation to have fallen to 5.9% from 6.2% in April.

Any slowdown would be a relief for investors, as it would be a relief for the all-important consumer and potentially give the Federal Reserve some breathing room in its current tightening cycle. But continued high inflation readings would likely add continued pressure to stocks as the Fed could get even more aggressive with its interest rate hike trajectory.

Here’s where US indexes stood at the 4:00 p.m. ET close on Thursday:

The Fed won’t be alone in raising interest rates next month, according to comments from the European Central Bank today. The ECB said it plans to hike interest rates in July for the first time in a decade. The decision comes as Europe grapples with an imminent recession, caused by surging commodity and food prices, which have been exacerbated by Russia’s ongoing war against Ukraine.

Natural gas prices surged 33% across Europe on Thursday after a fire broke out at a US export hub, putting further pressure on already tight global supplies. The Freeport liquefied natural gas export facility in Quintana, Texas, will remain closed for at least three weeks after an explosion.

Bill Ackman’s SPAC, which raised $4 billion from investors, may have to return the money as it has just six weeks to find a target company and make a deal. The SPAC and IPO market have floundered so far this year amid a broader decline in equity markets.

Lumber prices fell to a nine-month low on Thursday after mortgage demand hit its lowest level in more than two decades. The essential building commodity is down 50% year-to-date, and is down nearly 70% from its record high reached last year.

West Texas Intermediate crude oil fell as much as much as 0.66% to $121.30 per barrel. Brent crude, oil’s international benchmark, fell as much as 0.50% to $122.96.

Bitcoin fell 0.63% to $30,084. Ether prices fell 0.60% to $1,787.

Gold fell as much as 0.36% to $1,849.80 per ounce. The yield on the 10-year Treasury rose 2 basis points to 3.04%.

Read the original article on Business Insider