Happy Friday! It's Kristin with your daily morning digest.
Consumers are feeling the pressure of inflation on their wallets, and it's weighing on their outlook, according to the University of Michigan's preliminary reading of its May Consumer Sentiment Index. The index declined 9.4%, reversing last month's gains as consumers' assessment of their finances fell to its lowest level since 2013, with over a third citing inflation as the reason. In April, the index had jumped 9.8% on higher expectations for the year ahead, but lingered near decade-long lows, as worries about rising prices and supply chain disruptions caused by the war in Ukraine and COVID-19 lockdowns in China continued to weigh on sentiment.
Inflation slowed to an annual rate of 8.3% in April, down from 8.5% in March, but that rate is still one of the highest consumers have seen since the 1980s. To help bring down the cost of groceries, cars, clothes, and just about everything else, the Federal Reserve has started a series of interest rate hikes.
Yesterday, the Senate confirmed Federal Reserve Chair Jerome Powell for a second four-year term as Fed chair. In interviews, Powell suggested reining in inflation will be his top priority, and indicated the central bank is prepared to act aggressively to bring down inflation to its 2% target.
Investors and their portfolios have been shaken up by the recent volatility in U.S. equity markets. Markets are on the rise this morning, but the Dow, Nasdaq, and S&P 500 are all down for the week. With yesterday's fall, the S&P 500 came in danger of slipping into bear market territory, defined as a fall of 20% from the most recent high.
Along with stocks, prices of major cryptocurrencies are making gains after falling dramatically yesterday and earlier this week on the heels of the crash in value of a stablecoin pegged to the U.S. dollar, TerraUSD. The price of Bitcoin is holding above $30,000, with the price of Ether just above $2,100.
- Kristin
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