Despite some early-week strength, stocks finished the week with steep losses as the Dow Jones lost 800 points. The equities market started to sell-off on Thursday and the decline accelerated on Friday following the release of hotter-than-expected consumer price index (CPI) data for May. The VIX index turned sharply higher at the end of the week. Oil prices climbed for most of the week before falling on Friday, finishing the week modestly higher. Tech stocks underperformed the broad market as higher interest rates weighed on “long-duration” stocks. Value stocks held up better than growth stocks. The May US CPI release on Friday showed that headline inflation was 8.6% from a year earlier, topping consensus estimates. May’s headline CPI was also higher than in April (8.3%), disappointing investors who had been looking for “peak inflation”. U.S. Treasury yields increased, with the short- and intermediate-term maturities climbing sharply after the CPI release.
European shares fell sharply after the ECB suggested that it may increase interest rates at a faster-than-expected pace after July. The STOXX Europe 600 Index ended the week 3.95% lower. In the UK, PM Johnson survived a confidence vote.
Stocks in China rallied amid hopes for looser monetary policy and signs that Beijing was easing its years-long crackdown on the technology sector.