Another day of rampant volatility with the Dow opening near 500 points down and then swinging wildly back and forth all day long between near break-even and some 400 down (and even briefly being near 100 up right around 2 pm) before closing down 236, a loss of over 300 in just the final hour.  It was the same rerun – fear of inflation and rising interest rates – but also today a big slump in Cisco as well as continued declines in Apple that contributed to the chaos. The volatility is expected to continue until inflation starts to slow and that is not expected to happen until at least late summer.  

The S&P is now just 2% from bear market status and today the discord was added to when Goldman Sachs predicted a recession within two years, after yesterday’s prediction from Wells Fargo of a mild recession before the end of 2022.  (But hey, they predicted a recession within two years two years ago which did not happen so all these longterm crystal balls need to be viewed skeptically.)  Volume was below average at 12.7 billion. 

Thu  May 19, 2022  4:31 PM

Wall Street ends lower as Cisco and Apple sink

By Devik Jain and Noel Randewich

DJ: 31,490.07  -1164.52      NAS: 11,418.15  -566.37        S&P: 3,923.68  -165.17    5/18

DJ: 31,253.13  -236.94        NAS: 11,388.50  -29.66          S&P: 3,900.79  -22.89      5/19

May 19 (Reuters) - Wall Street ended lower after a volatile session on Thursday, with Cisco Systems slumping after giving a dismal outlook, while investors fretted about inflation and rising interest rates.  Shares of Cisco (CSCO.O) slumped 13.7% after the networking gear maker lowered its 2022 revenue growth outlook, taking a hit from its Russia exit and component shortages related to COVID-19 lockdowns in China. read more  Apple (AAPL.O) and chipmaker Broadcom (AVGO.O) declined 2.5% and 4.3%, respectively, and weighed on the S&P 500.

"The reality is that inflation is running hot and interest rates are rising," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis, Minnesota. "Until you get that inflation rate to start slowing, we're going to have increased volatility, and in our view that continues through throughout most of the summer months."

Twitter (TWTR.N) climbed 1.2% after Bloomberg reported that company executives told staff that Elon Musk's $44-billion deal was proceeding as expected and they would not renegotiate the price. read more

The S&P consumer staples index (.SPLRCS) fell 2% to its lowest level since December as retail firms face the brunt of rising prices hurting the purchasing power of U.S. consumers.  Kohl's Corp  (KSS.N)  became the latest retailer to flag a hit from four-decades high inflation as the department store chain cut its full-year profit forecast. read more  Its shares, however, rebounded over 4% after slumping 11% in the previous session due to dismal results from Target Corp (TGT.N).

The S&P 500 is down about 18% from its record close on Jan. 3 as investors adjust to strong inflation, geopolitical uncertainty stemming from the war in Ukraine and tightening financial conditions with the U.S. Federal Reserve raising rates.  A close of 20% or more below its January record high would confirm the S&P 500 has been in a bear market since hitting that peak, according to a widely used definition.  Goldman Sachs strategists predicted a 35% chance of the U.S. economy entering a recession in the next two years, while the Wells Fargo Investment Institute expects a mild U.S. recession at the end of 2022 and early 2023. read more

The S&P 500 declined 0.58% to end the session at 3,900.79 points.  The Nasdaq declined 0.26% to 11,388.50 points, while the Dow Jones Industrial Average declined 0.75% to 31,253.13 points.  Thursday's mixed performance followed a drop of over 4% in the S&P 500 on Wednesday, the benchmark's worst one-day loss since June 2020.  The CBOE volatility index (.VIX), also known as Wall Street's fear gauge, fell to 29.5 points on Thursday, after hitting its highest level since May 12 earlier in the session.

Canada Goose Holdings Inc jumped almost 10% after it forecast upbeat annual earnings, encouraged by strong demand for its luxury parkas and jackets. read more

Volume on U.S. exchanges was 12.7 billion shares, compared with a 13.4 billion average over the last 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a 1.15-to-1 ratio; on Nasdaq, a 1.31-to-1 ratio favored advancers.  The S&P 500 posted 1 new 52-week highs and 43 new lows; the Nasdaq Composite recorded 12 new highs and 326 new lows.