Stocks began the day with a lower open and saw little respite from the pressure throughout the trading day following a much hotter than expected April report on consumer price inflation. The hefty surge in April CPI has added fuel to the fire of existing concerns about the impact of inflation and the potential need for the Fed to shift its ultra-low rate stance.
ECONOMIC EVENTS: In the U.S., the Consumer Price Index report massively beat estimates, with April gains of 0.8% for the headline rate and 0.9% for the core figure. The 12-month headline index spiked to a 4.2% year-over-year rate versus 2.6% previously, while the core rate accelerated to 3.0% year-over-year from 1.6% growth in the prior month.
TOP NEWS: Domino's Pizza (DPZ) shares closed fractionally higher after activist investor Bill Ackman said during an event hosted by The Wall Street Journal that his Pershing Square firm now owns "about 6%" of the pizza delivery chain's stock, having acquired shares after selling the firm's position in Starbucks (SBUX). Ackman said that he started buying Domino's at $330 per share, adding that he views the stock as a "very compelling story." Starbucks shares were nearly 3% lower after the news.
On the earnings front, shares of Electronic Arts (EA) fell 1.2% after the game maker reported better than expected fourth quarter bookings. EA also provided first quarter and fiscal 2022 earnings and bookings guidance, with the company saying on its quarterly call that it took a "very conservative" view on net bookings due to its acquisitions of Glu Mobile (GLUU) and Codemasters.
In other earnings news, Wendy's (WEN) was in focus after the fast food chain reported better than expected Q1 earnings and revenue, with U.S. systemwide sales growth of 13.1% year-over-year in the quarter. In addition, Wendy's also boosted its share repurchase authorization by $50M and raised its quarterly dividend 11%.
In M&A news, Arthur J. Gallagher (AJG) shares were 3.1% lower after Aon plc (AON) and Willis Towers Watson (WLTW) signed a definitive agreement to sell Willis Re and a set of Willis Towers Watson corporate risk and broking and health and benefits services to Arthur J. Gallagher. These businesses will be divested for a total consideration of $3.57B. "The agreement resolves questions raised by the European Commission and is intended to address certain questions raised by regulators in certain other jurisdictions," Aon and Willis Towers Watson said.
Meanwhile, Reuters reported that the California Air Resources Board wants almost every trip on Uber (UBER) and Lyft (LYFT) to be in an electric vehicle, mandating costly measures that the ride-hailing platforms call unrealistic without additional public subsidies for EVs. The proposed mandate, expected to pass on May 20, require EVs to account for 90% of ride-hailing vehicle miles traveled by 2030, a lesser goal than the companies themselves have established, according to Reuters.
Additionally, media reports indicated that a CDC advisory committee voted 14 yes to zero no votes on the question of whether Pfizer (PFE) and BioNTech's (BNTX) COVID-19 vaccine should be recommended for children aged 12-15 under an Emergency Use Authorization.
MAJOR MOVERS: Among the noteworthy gainers was Pershing Square Tontine (PSTH), which rose 7.7% after Pershing Square's Bill Ackman said he's "deeply engaged" in merging Pershing Square Tontine with an iconic business and that he's "cautiously optimistic" a deal for the SPAC can be reached. Also higher were Upstart Holdings (UPST) and fuboTV (FUBO), which gained a respective 2.7% and 10.4% after reporting quarterly results.
Among the notable losers was Wingstop (WING), which declined 3.7% after Insider's Mary Meisanzahl reported that Chick-fil-A submitted a trademark application to U.S. regulators on May 4 to claim the name "Outfox Wings" ahead of plans to launch a new restaurant concept later this year. Also lower were Array Technologies (ARRY), SelectQuote (SLQT), and Lumentum (LITE), which fell a respective 46%, 20.1%, and 17% after reporting quarterly results.
INDEXES: The Dow fell 681.50, or 1.99%, to 33,587.66, the Nasdaq lost 357.74, or 2.67%, to 13,031.68, and the S&P 500 declined 89.06, or 2.14%, to 4,063.04.
