Stocks slump on Fed fears, jobless claims impresses again, Conagra’s inflation take, bitcoin lower

US stocks declined as fears grew that the Fed may have to be much more aggressive in tightening policy over the next few meetings.  Inflation is everywhere and that has stock investors nervous. Conagra’s results delivered a reminder pricing pressure will continue and that is a theme we will hear all earnings season.  Supply chain issues may worsen as shipping goods in containers from Asia to the US may see further delays from China’s lockdowns. The risk that inflation will get so ugly that the Fed will have to send the economy into a recession is now becoming a base case scenario for some traders.

Jobless claims sparkle

Initial jobless claims looked too good to be true.  The weekly data point declined 5,000 to 166,000, much better than the consensus estimate of 200,000.  Today’s impressive claims data reminds Wall Street that the labor market is ‘firing on all cylinders’, which should allow the Fed to continue to solely focus on inflation. Continuing claims did have an upside surprise, rising to 1.523 million, more than the analysts’ estimate of 1.30 million and 1.506 million prior.

Conagra’s inflation take

Conagra is feeling the inflation pinch.  The food producer delivered mixed earnings and trimmed their margin guidance as pricing pressures intensified.  Conagra noted they are experiencing higher-than-expected cost pressures and expect those pressures to continue into the next quarter.  They see inflation hitting certain frozen, refrigerated, and snacks businesses. So far, they are still seeing consumer demand remain strong given this round of price increases.

The US consumer isn’t breaking just yet, but retail spending nervousness is growing as prices are expected to continue to surge. 

Bitcoin

Bitcoin is struggling for direction as Wall Street grows cautious over how aggressive the Fed will be with tightening of monetary policy.  Bitcoin has held up nicely given the recent bond market selloff, but it could struggle if that move continues.  Bitcoin’s long-term outlook remains bullish but if risk aversion runs wild, it could be vulnerable to a drop towards the USD 38,000 level.

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