Home > Weekly recap: Stocks tumble, dollar and yields up on Fed tightening and US inflation data

Weekly recap: Stocks tumble, dollar and yields up on Fed tightening and US inflation data

  • Nasdaq snapped three-day upside while losses occurred across the markets after Fed policy and US inflation data

  • JPMorgan and Citigroup fell after the earnings reports, while KB Home and Wells Fargo recorded significant bumps in their respective stock prices.

  • The dollar and bond yields close the week higher as gold holds above $1,800 an ounce.

US stocks traded lower this week after an attempted recovery earlier hit a snag on Wednesday after US Federal Reserve Chair Jerome Powell indicated the central bank was ready to use every tool available to fight inflation.

On Thursday, global stocks fell after US inflation data showed prices increased the fastest in 40 years in 2021 with a 7% spike.

The Dow Jones Industrial Average was down 1.2%, the S&P 500 at 0.79%, and the Nasdaq composite was down 0.52% at the time of writing.

In Europe, the pan-European Stoxx 600 closed 1% lower, while Germany’s DAX lost 0.9% and France’s CAC declined 0.8%. UK’s FTSE 100 ended the week 0.23% down.

Stocks: Gainers and losers in the week

The KB Home stock soared 13% on Thursday, with the massive gains coming after the homebuilder fourth-quarter earnings beat analyst estimates.

Delta Air Lines shares jumped 3% after the airline reported better than expected Q4 financial results, while American Airlines and United Airlines also gained as the travel sector looked to bounce from Omicron-related market jitters.

Ford Motor Company (F) also hit the news this week, with its price rallying to a 20-year high to catapult the automaker’s market capitalisation above the $100 billion mark. The historic move for the company comes after its share price rose above $25.87.

Tech stocks sold off again on Thursday to see major losses for the Nasdaq wipe out year-to-date returns. Apple shares fell 1.9%, Meta Platforms dropped 2% while Amazon slid 2.4% and Microsoft clipped 4.2% to highlight the sector’s weakness.

AAPL closed 0.51% up, AMZN edged 0.57% and FB stock closed 1.66% higher on Friday.

JPMorgan and Citigroup shares fell on Friday despite the companies reporting better-than-expected earnings. Wells Fargo, which also released Q4 earnings on Friday, surged by about 4%.

In Asia, shares of cruise operator Genting Hong Kong slid more than 50% after the company acknowledged the possibility of defaulting on its financial obligations.

Forex: Dollar looks to recover after a mixed week

The US dollar retreated significantly this week, losing support at a key level against a basket of major currencies. The greenback struggled against the euro, sterling and Japanese yen, but has clipped some of the losses against the eurozone and UK currencies.

The dollar index notched back above 95.28, up about 0.5% and on course for further bounce as stocks look to end the week lower.

Treasury yields rise

In the bond market, the 10-year US Treasury yields retreated mid-week to slip from 1.80% to around 1.71%. They have since gained about 40 basis points to around 1.75%, helped by the FOMC minutes and the expected acceleration of the Fed’s tapering.

The CPI data that showed inflation at four-decade highs has also added to the selling in stocks and other speculative markets.

Commodities

Gold is holding above $1,810 per ounce for another week above the crucial support. Spot gold price reached highs of $1,828 an ounce this week helped by the sell-off in stocks, though gains for the dollar dampened the market.

Oil rose above $80 a barrel, with the WTI crude reaching highs of $83.68 per barrel. Elsewhere, Bitcoin slipped below $40K before recovering later in the week to touch a seven-day peak of $44,800.

Earnings season

This week saw several companies release earnings reports, including Delta Air Lines (DAL), KB Home (KB), Citigroup (C), JPMorgan (JPM) and Wells Fargo (WFC).

Earnings season continues next week with major banks Morgan Stanley and Bank of America, while Netflix and UnitedHealth are also scheduled to report.

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