The stronger than expected CPI reversed premarket stock gains and pushed the major indices lower. A weaker Michigan consumer sentiment didn’t help with the overall sentiment.

• The weekly percentage declines in the Dow, S&P, and NASDAQ weeks was the worst since January 21
• Major indices closed near lows for the day
• Dow Jones is down 10 of the last 11 weeks
• NASDAQ and S&P is down 9 of the last 10 weeks
• All 11 S&P sectors were lower. The worst sector was consumer discretionary which fell over -4.1%. Technology fell -3.9%, Financials fell -3.65%. Consumer staples was the best performer at -0.38%

The final numbers for the day are showing:

• Dow industrial average fell -880.02 points or -2.73% at 31392.80
• S&P index fell -116.96 points or -2.91% at 3900.85
• NASDAQ index fell -414.19 points or -3.52% at 11340.03
• Russell 2000 fell -50.57 points or -2.73% at 1800.28

For the trading week:

• Dow fell -4.58%
• S&P index fell -5.08%

• NASDAQ index fell -5.6%
• Russell 2000 fell -4.41%

Looking at the Dow 30, the worst performers were:

• Dow, -6.06% -6.06%
• Goldman Sachs -5.48%
• Boeing, -5.05%
• J.P. Morgan, -4.65%
• Salesforce, -4.6%

The only winning stock in the Dow was Walmart with a gain of +0.63%. The best of the worst showed:

• Verizon fell -0.16%
• Procter & Gamble fell -0.36%
• Walgreens boots fell -0.43%
• Coca-Cola fell -0.58%

After the close Tesla has proposed a 3 for1 stock split. The stock closed at $696.69. In after-hours trading it is trading up to $716.23.

Amazon shares went through their 20 for 1 stock split this week. For the week after a rise on Monday, the shares are ending the week down -10.38%.

This article was written by Greg Michalowski at www.forexlive.com.

It’s increasingly clear that the Fed is now in the middle of one of the most-rapid tightening cycles ever. For next week’s meeting, the market now sees an 18% chance of a 75 basis point hike with at least 50 bps as a certainty.

Just a few weeks ago there was talk about a pause after another 50 bps hike in July but now at least 50 bps more is priced in for September with more beyond.

Here’s the most likely path, as implied by Fed funds futures:

June 15: 50 bps to 1.25-1.50%

July 27: 50 bps to 1.75-2.00%

Sept 21: 50 bps to 2.25-2.50%

Nov 2: 50 bps to 2.75-3.00%

Dec 14: 25 bps to 3.00-3.25%

That would be a cycle of five straight 50 basis points hikes (including last month) with the Fed trying to get back ahead of the curve. Into 2023, hikes continue to be priced up to 3.50-3.75% at this time next year.

CIBC boosted its baseline by 25 bps today but still thinks what the market is pricing is too much, and the way markets are tumbling, they may have a point.
Total annual inflation is set to remain elevated for longer, given the rise in oil prices and the
continued pressure on food supply chains. While core annual inflation could still decelerate in June, that will reflect base
effects. We’ll need to see an unwinding of supply chain issues and a slowdown in shelter costs to drive inflation closer to
target, and this data suggests that the Fed will want to get rates up a bit sooner, and a quarter point further, than our prior
forecast. Four 50 basis point hikes this year will take the ceiling for the funds rate to 3%, but unlike market expectations
for further hikes, we expect that to produce enough of a growth slowdown to quell inflation in 2023.
At this point, the top is unknowable but anyone looking to hold any kind of risk trade needs to shelter themselves against a storm in rates.

This article was written by Adam Button at www.forexlive.com.

It’s been seven terrible weeks for most global financial markets but seven straight weeks of gains in crude oil.

WTI finished down by 84-cents on Friday but climbed $1.80 on the week. It’s the highest finish to a Friday since 2008.

Earlier this year oil spiked as high as $130.50 when the Ukraine war broke out but it was a short-lived spike and finished that week at $109.33.

The latest rally has come on signs of persistent shortages despite Chinese lockdowns, more OPEC supply and the SPR release. The next challenge is the risk of rapidly-slowing global growth amidst higher rates.

So far though, crude has passed all the tests and technically, not much stands in the way of a return to $130.

Even today with all the bearishness in stocks and bonds, the 0.7% decline is hardly material. WTI fell as low as $118.33 but rebounded more than $2 from the lows.

For the weekend, two spots to watch are Libya and Norway. In Libya, rebels are threatening to block another port while in Norway workers could announce a strike.

Demand destruction is likely creeping in; in part because gasoline and diesel prices are even-higher than they should be, because of refinery problems. Yesterday, US retail gasoline prices hit $5/gallon on average nationally for the first time.

This article was written by Adam Button at www.forexlive.com.