Thursday, May 19, 2022

Global Market Square

By on May 12, 2021

The U.S. stock market closed with steep losses for the third day in a row Wednesday, as the Consumer Price Index report showed a 4.16% increase in consumer prices from a year ago, far higher than the 3.6% projected.  We must note that the U.S. Treasury 10-year note’s yield rose significantly, to 1.69%.

The Consumer Price Index significantly increases concerns in both the stock and bond markets that rising prices will continue. We must comment that this is the fastest rate of increase since September 2008. The driving force is the rising price of energy, which has risen 25% year-over-year. Another energy-related situation adding shortages is the Colonial Pipeline ransomware event that added to the supply shortage. 

As the inflation reading was higher than expected, investors will not focus on which actions the Federal Reserve Bank may take, even as the Fed has stated that these inflationary rises are temporary and will diminish as the economy reopens. 

We maintain our view that these market shortfalls are part of the stock rotation process that has been occurring.

Eurozone Summary for May 12:

  • Stoxx 600 closed at 437.93, up 1.32, or 0.30%.
  • FTSE 100 closed at 7,004.63, up 56.64, or 0.82%
  • Dax index closed at 15,150.22, up 30.47, or 0.20%.

Wall Street Summary for May 12:

  • The Dow Jones Industrial Average closed at 33,587.66, down 681.50 points, or 1.99%.
  • The Standard & Poor’s 500 closed at 4,063.04 down, 89.06 points, or 2.14%.
  • The Nasdaq Composite Index closed at 13,031.68, down 357.75 points, or 2.76%.
  • The Birling Capital Puerto Rico Stock Index closed at 2,592.03, up 4.74 points, or 0.18%.
  • The U.S. Treasury 10-year note closed at 1.69%.
  • The U.S. Treasury 2-year note closed at 0.16%.

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