Stock market today: Stocks tumble on a lousy week with a wild Friday

Wall Street spent most of Friday applying vibrant lipstick to what was otherwise a week-long hog for investors.

A broad market rally – which saw each of the 11 S&P 500 sectors end higher – was not a response to new positive catalysts. Quarterly reports were light today with most investors reversing the timing of earnings on next week’s retail slate.

And Friday’s most notable data point was the latest reading from the University of Michigan’s Consumer Sentiment Index, which fell from 65.2 in April to 59.1 in May – a 10-year nadir. well below the expected reading of 64.1.

Sometimes the market is simply enjoying a relief rally.

“After a week of heavy selling, but with inflationary pressures easing just at the margin, and the Fed still appearing to be committed to 50 basis point hikes for each of the next two FOMC meetings, the market was ready for the kind of strong rally endemic to bear market rallies,” says Quincy Krosby, chief equity strategist for LPL Financial.

He adds that given that the Federal Reserve is only at the beginning of its rate hike cycle and would like to see demand pull back further, “this rally is most likely going to weaken.”

Of course, even if this is just a pause before further market declines, investors don’t necessarily have to time the dip to buy at a decent valuation.

“It’s still an attractive entry point, because we don’t think we’re in 1999/2000,” says Nancy Tengler, CEO and CIO of asset management firm Laffer Tengler Investments.

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Buying was strongest in consumer discretionary shares (+3.9%) such as (AMZN, +5.7%) and You’re here (TSLA, +5.7%), as well as Technology plays (+3.3%) of which Nvidia (NVDA, +9.5%) and Advanced micro-systems (AMD, +9.3%).

Energy (+3.4%) also saw higher supply amid a sharp rise in oil; U.S. Crude Futures ended up 4.1% at $110.49 a barrel, helping push to new highs for gasoline futures.

Notably absent from the rally was Twitter (TWTR, -9.7%), which leaked after Elon Musk tweeted that the deal was “temporarily suspended”.

All the major indices posted spectacular gains on Friday, although for the week there were still losses everywhere: Nasdaq Compound (+3.8% to 11,805) still ended 2.8% over the week, the S&P500 (+2.4% to 4,023) was down 2.4% over the five days, and the Dow Jones Industrial Average (+1.5% to 32,196) closed the week 2.1% in the red.

Other news on the stock market today:

  • Small cap Russell 2000 rebounded 3.1% to 1,792.
  • Gold Futures Contracts didn’t have that luck. The yellow metal was down 0.9% to hit a 14-week low of $1,808.20 an ounce.
  • Bitcoin fell 5.1% to $30,034.99. (Bitcoin trades 24 hours a day; prices shown here are as of 4 p.m.)

Keep your guard against inflation

Inflation is prevalent virtually everywhere – including on US corporate earnings calls.

We’re almost at the end of the first quarter earnings season, and over the past few months, publicly traded companies have kept repeating the “I” word when discussing their most recent.

FactSet used its document search technology to track mentions of the term “inflation” in corporate earnings calls. 377 cited the term “inflation”… which is well above the five-year average of 155.”

In fact, it’s the highest total number of S&P 500 companies citing inflation in their calls, going back to at least 210. (The previous record? 356…as of the last quarter of 2021.)

This is another signal that inflation continues to be a lingering problem – and with forecasts calling for still high inflation ahead, more active investors would do well to pack a little more protection. We’ve already looked at other ways to stay ahead of inflation, such as stocks with pricing power and inflation-fighting funds.

Today we look at another batch of investments that can help exploit high inflation, with a focus on commodities, real estate and other market sectors.

Kyle Woodley has long been AMD, AMZN and NVDA at the time of this writing.

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