S&P 500 Posts 2.4% Weekly Drop Amid Worries Over Inflation, Monetary Tightening; Real Estate, Financials, Tech Lead Broad Slide

The Standard & Poor's 500 index fell 2.4% this week on concerns about inflation and monetary tightening.

The market benchmark ended the week at 4,023.89, down from last Friday's closing level of 4,123.34. It has fallen 2.6% in May so far and has declined nearly 16% in the year to date.

This week's slide came as data on consumer and producer prices added to investor worries about inflation.

The data showed consumer prices rose 8.3% on an annual basis in April, down slightly from March's 8.5% annual rate, but high enough to concern investors. The core consumer price index, which excludes food and energy due to their volatility, was up 6.2% on an annual basis.

Producer prices, meanwhile, jumped 11% year over year in April, with core PPI up 8.8%, the Bureau of Labor Statistics said.

Amid concerns about how the US economy may be impacted by the monetary tightening being done in an effort to tamp down on rising prices, the inflation data sent almost every sector into the red.

Real estate had the largest percentage drop of the week, down 3.9%, followed by a 3.6% slide in financials, a 3.5% drop in technology and a 3.4% slip in consumer discretionary. Just one sector managed to avoid ending the week in the red: consumer staples, which eked out a 0.3% increase.

In real estate, shares of Prologis (PLD) declined 8.9% as Duke Realty (DRE) said the logistics real estate company's $23.71 billion takeover bid was "insufficient." Prologis had said a day earlier that it would offer 0.466 share of its stock for each Duke common share, representing $61.68 per share, or a 29% premium to Duke's closing price on Monday.

The financial sector's decliners included shares of Capital One Financial (COF), American Express (AXP), Discover Financial Services (DFS) and Synchrony Financial (SYF) as all four received investment rating downgrades from Wolfe Research. Capital One and Synchrony were downgraded by Wolfe to underperform from peer perform while Discover Financial and American Express were downgraded to peer perform from outperform. Shares of Capital One Financial fell 8.3% on the week while American Express shed 5%, Discover lost 5.5% and Synchrony declined 12%.

In technology, shares of Nvidia (NVDA) slipped 5.2% this week after the chipmaker said last Friday that the company agreed to pay a $5.5 million penalty to settle charges that it didn't adequately disclose the impact of cryptomining on its gaming business.

The decliners in consumer discretionary included shares of Norwegian Cruise Line Holdings (NCLH), which fell 11% on the week as the cruise operator reported a Q1 net loss that was narrower than the loss it posted in the year-earlier quarter but was wider than the loss analysts expected. Revenue also missed the Street consensus estimate. In addition, the company warned it expects to report a Q2 loss due to the COVID-19 pandemic and the effects of the Russia-Ukraine conflict.

On the upside, the gainers in consumer staples included Philip Morris International (PM), which unveiled an acquisition offer for Swedish Match at a price of 106 Swedish kronor per share in cash, or about $16 billion. Shares of Philip Morris rose 5.5%.

Retailers including Home Depot (HD), Walmart (WMT), Lowe's (LOW), Target (TGT) and Foot Locker (FL) will report next week. Other companies expected to release quarterly results next week include Cisco Systems (CSCO) and Deere (DE).

Economic data expected next week include retail sales, building permits, housing starts and existing home sales for April.