US Stock Market: DJIA, S&P500, Nasdaq and Russell rose over 1.5% on Thursday

Stocks fell and bond yields rose dramatically on Thursday after a strong reading on inflation raised anticipation that the Federal Reserve will have to act forcefully to calm the economy by raising interest rates.  The S&P 500 fell 1.8% as inflation reached its highest level since 1982. It also pushed Treasury yields higher, as traders gambled the Fed will have to stifle the economy with a larger-than-usual rate rise next month. According to Tradeweb, the 10-year Treasury yield has surpassed 2% for the first time since August 2019.

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This year has seen volatile trading on Wall Street as investors try to predict how much and how soon the Fed will raise interest rates to manage growing inflation. The benchmark S&P 500 has dropped three of the previous five weeks and is presently 6.1% below its all-time high set on January 3.

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After another day of dramatic fluctuations for the indices, more than 85% of the equities in the S&P 500 finished down. The Dow Jones Industrial Average dropped 1.5%, while the Nasdaq Composite dropped 2.1%. Stocks of smaller companies have also fallen. The Russell 2000 index fell 32.34 points, or 1.6%, to 2,051.16.

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Expectations for increased rates aided the decline of numerous Big Tech stocks, including Microsoft, which fell 2.8%. That’s been the market’s customary reaction recently, mirroring the previous years when ultra-low rates helped push tech companies to the market’s largest gains.

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Energy stocks, which can profit from greater inflation as energy costs rise, and raw materials companies outperformed other sectors.

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The Walt Disney Company gained 3.3%, the most in the S&P 500, after reporting a resurgence in theme-park attendance last quarter and saying it recruited more members to its Disney+ streaming service than analysts expected. Both its profit and revenue for the most recent quarter exceeded Wall Street’s expectations.

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Coca-Cola gained 0.6% after reporting higher-than-expected earnings for the most recent quarter. Kellogg anticipates double-digit inflation in ingredients as well as packaging cartons and cans this year. To compensate, the corporation is hiking its rates. Its stock increased by 3.1%.