May 20, 2022

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Stock Market Dips As Wholesale Inflation Rises; Utilities And Tech Stocks Lead Declines; Disney Takes A Hit

The stock market dipped in early afternoon trading Thursday after wholesale inflation rose in April. Utilities and technology stocks led declines, while retailers led gainers. Walt Disney (DIS) took a hit after it reported earnings.




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The Nasdaq composite fell 1% and the S&P 500 was down 1.1%. The Dow Jones Industrial Average was down 1.2%. The small-cap Russell 2000 was flat.

With a decline of more than 30% from its prior high, the Nasdaq is on pace to surpass the loss during the pandemic bear market of March 2020. According to Dow Jones Market Data, the composite plummeted 30.1% in the Covid crash.

In the Dow, Disney gapped down 1.4% to a two-year low after the company missed earnings and sales estimates for its March quarter. Disney+ subscriber growth blew past estimates but Disney warned that Covid-19 continues to impact all operations “depending on local circumstances.”

U.S. Stock Market Today Overview

Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 31446.75 -387.36 -1.22
S&P 500 (0S&P5) 3891.54 -43.64 -1.11
Nasdaq (0NDQC ) 11251.11 -113.13 -1.00
Russell 2000 (IWM) 170.56 -0.04 -0.02
IBD 50 (FFTY) 29.06 -0.23 -0.79
Last Update: 1:40 PM ET 5/12/2022

Consumer discretionary stocks led S&P sectors. Online retailers gained, with Amazon.com (AMZN) up 1.4% in early afternoon trading.

Technology and utilities stocks led on the downside, with Apple (AAPL), Microsoft (MSFT) and NextEra Energy (NEE) all sliding more than 2%.

Volume rose on the NYSE and Nasdaq compared with the same time on Wednesday.

Wholesale Inflation Remains High

Producer prices rose 0.5% in April, down from a 1.4% rise in March, meeting Econoday estimates. Wholesale inflation rose 11% in April from a year ago, hotter than the 10.7% estimate. The producer price index is a measure of pricing strength based on selling prices received by domestic producers for their output.

Core prices, which exclude food and energy costs, rose 0.4% month to month and 8.8% on an annual basis. Both were slightly below forecasts.

On Wednesday, a report said April’s consumer price index rose at an annual pace of 8.3%, down vs. the previous month’s 8.5%, but higher than economists projected.

Meanwhile, the Senate is scheduled to vote to confirm Federal Reserve Chairman Jerome Powell to a second four-year term Thursday afternoon. His nomination is expected to get bipartisan support in spite of the fact the Fed faces the highest inflation in 40 years and is using aggressive interest-rate increases aimed at lowering price pressures.

The yield on the 10-year Treasury note fell 6 basis points to 2.85%.

Also this morning, the number of jobless claims totaled 203,000, nearly unchanged from 202,000 the previous week. Economists had forecast 190,000, according to Econoday.

Dillard’s, Rivian Climb On Earnings

Dillard’s (DDS) stock rallied aa much as 9% on Thursday and was setting up in a base. The department-store chain reported first-quarter results that beat expectations, helped by a big bump in margins and fewer markdowns as prices rise.

Dillard’s earned $13.68 per share. That was well above FactSet estimates for $6.74. Net sales came in at $1.61 billion, a 21% gain from a year ago and above forecasts for $1.545 billion. Same-store sales jumped 23%, better than expectations for a 15% increase.

DDS was rebounding from the 50-day line. The stock was in a base with a 416.17 buy point. Investors could use 344.17 as an early entry from a handle that’s too low in the consolidation to be proper.

Rivian (RIVN) stock rose 17% in heavy volume after the electric-pickup truck maker maintained its 2022 production guidance. The news followed its first-quarter report late Wednesday, when Rivian missed revenue expectations and posted a larger loss than expected.

Rivian also announced Thursday that it is recalling 502 battery-powered pickup trucks over potentially faulty air bags that could pose a safety risk to children in the front passenger seat.

Biotech stock Ascendis Pharma (ASND) plummeted Thursday after its growth hormone deficiency treatment, Skytrofa, missed first-quarter sales estimates.

Overall, the first quarter ended mixed. Total revenue came in at 6.8 million euros — about $7.1 million — and easily topped forecasts, according to FactSet. But Ascendis had a wider-than-expected loss that also grew year over year.


S&P 500 Flirts With Bear In Wild Day; These Market Areas Rally


Shell Falls Despite Oil Price Gains, Sale Of Russian Assets

The Innovator IBD 50 ETF (FFTY), a bellwether for growth stocks, gained 0.6%. Fertilizer stock CF Industries (CF) and biotech firm Amphastar Pharmaceuticals (AMPH) were standouts.

Crude oil prices rose another 1.4% to $107 a barrel as Russia’s presence in Ukraine turns into a long-term war. Russia warned NATO today that providing military assistance to Ukraine threatens to expand the war into a wider conflict.

Oil giant Shell (SHEL) fell 1.6% despite higher oil prices and the fact that the company found a buyer for its Russian assets. Shell agreed to sell its Russian retail-station and lubricants business to oil giant Lukoil PJSC. Shell is the latest Western company to find a local buyer for its planned Russia exit. Shell shares are below a flat-base buy point of 56.23.

AmerisourceBergen (ABC) gapped below its 50-day moving average in heavy volume, a break of support that indicates a sell signal. Walgreens Boots Alliance (WBA) said it sold 6 million shares of AmerisourceBergen at $150 each, reducing its stake from 28.1% to 25.2%.

AmerisourceBergen said today it is resuming share repurchases, and plans to pay down $2 billion in debt within two years of the June 2021 acquisition of Alliance Healthcare. The stock is considered defensive and had held up well until today.

Follow Michael Molinski on Twitter @IMmolinski

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Stock Market Dips As Another Inflation Gauge Rises; Tech And Utilities Lead Declines; Disney Takes A Hit