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Market Snapshot: Dow skids 300 points in choppy trade as S&P 500 teeters on brink of bear market

U.S. stocks traded lower Thursday, as concerns about lingering inflationary pressures weighed across several asset classes.

What’s happening

The Dow Jones Industrial Average
DJIA,
-0.73%

fell 261 points, or 0.8%, to 31,573.

The S&P 500
SPX,
-0.95%

fell 41 points, or 1.1%, to 3,894.

The Nasdaq Composite
COMP,
-0.97%

she 157 points, or 1.4%

On Wednesday, the Dow Jones Industrial Average fell 327 points, or 1.02%, to 31834, the S&P 500 declined 66 points, or 1.65%, to 3935, and the Nasdaq Composite dropped 373 points, or 3.18%, to 11364.

The S&P 500 has dropped 18% from its record high set on Jan. 3.

What’s driving markets

Fresh economic data showed slowing wholesale inflation in April, but still intense price pressures. Meeting forecasts, prices rose 0.5% in April, from a 1.6% jump in March. Prices over the year slowed to 11% from 11.5%.

Weekly jobless claims rose 1,000 to 203,000 in the week ended May 7, the Labor Department reported.

Inflation data released Wednesday may have shown a peak in price growth, but the figures were hotter than forecast. Core CPI, which excludes energy and food and tends to be a better predictor of future inflation, surprisingly accelerated in April.

“It means that the Fed might have to tighten too much leading to a sharp economic slowdown, but it also means that the economic projection in tech and some other assets are now seen as far too optimistic,” said Sebastian Galy, senior macro strategist at Nordea Asset Management.

“Equity analysts adopting fixed income speech call it a long duration equity that is long on hope as forecasting past two years is very difficult when the wave of liquidity/narrative is no longer so supportive.”

The cryptocurrency market has been particularly roiled, as the stablecoin Tether
USDTUSD,
-0.30%

said it performed a $1 billion swap after it fell as low as 95 cents on the dollar.

“Given that the wave of liquidity pushed tech and some other asset classes up to the top of the dam before it started to collapse, the price dynamics are complex, nonlinear and hard to forecast,” said Galy.

Walt Disney
DIS,
-3.36%

shares were under pressure after the entertainment giant forecast that streaming subscriber growth may tail off after better-than-forecast additions in its fiscal second quarter.

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