Trying to make sense of the 5 May 2022 drop

Finally, the market responds rationally to the 50 basis points increase in the interest rate after the rally post Powell's assurance of rate hikes.

 

U.S. stock futures opened little changed Thursday evening after a sharp sell-off on Wall Street, as concerns over the Federal Reserve's ability to bring down inflation while maintaining solid economic activity resurged.

Extract from Zach Stein:

"Thursday's stock selloff suggests that Wednesday's post-FOMC market action was a relief rally. We are still not out of the woods yet, as there is still too much uncertainty over how the Federal Reserve's actions will tame inflation without causing a recession,"

Zach Stein, CIO of Carbon Collective, wrote in an email Thursday. "The concerns that triggered the stock market correction over the past few months, such as inflation, Russia and Ukraine war and surging oil prices, are still with us and haven't been resolved yet."

 

From Economic Calendar: 

Economic Calendar for 5 May 2022

Initial jobless claims turned out to be worse than expected 200k vs 182k

US QoQ unit labor cost is up 11.6% vs 9.9% expected. Nonfarm productivity QoQ has dropped 7.5% vs 5.4%.
With cost increased, lesser productivity & increased jobless claims, this should be bearish for US GDP where US could possibly enter a technical recession following 2 quarters of decline.

Let us be cautious as observance can turn out to be a more prudent choice.