Wall Street is trading with sharp declines after negative inflation data

(Reuters)

Actions Wall Street This Tuesday opened with severe waterfalls After the August inflation report did not meet investor expectations and raised fears of another sharp interest rate hike by the Federal Reserve.

In the first minutes of trading, the indicator Dow Jones decreases by 1.6% while the selectivity Standard & Poor’s 500 By about 2.1%. On the other hand, technology Nasdaq You lose nearly 3 percent.

The report released Thursday indicated that consumer prices rose unexpectedly in August, as lower gasoline prices were offset by higher rents and food costs.

the report European stock markets also shook, which quickly turned negative after showing gains in the early hours of the day. At the same time, Most currencies suffered heavy losses against the dollar.

President Joe Biden (Reuters/Kevin Lamarck)
President Joe Biden (Reuters/Kevin Lamarck)

“Today’s data shows further progress in curbing core inflation in the US economy. In general, prices have remained essentially flat in our country for the past two months.” Joe Biden. “It will take more time and determination to bring down inflation,” the president added, however.

Consumer prices rose 8.3% in August over the previous year, the government said on Tuesday. Although that number is still painfully high, it is down from 8.5% in July and 9.1% in June, a four-decade high. On a monthly basis, prices are up 0.1% after a flat reading in July.

Consumer prices are still at the heart of the US economic crisis (Photo by Joe Riddell/Getty Images)
Consumer prices are still at the heart of the US economic crisis (Photo by Joe Riddell/Getty Images)

Except for the food and volatile energy categories, Alleged core prices rose 0.6% from July to August, more than many economists had expected and the sign Inflation continues.

“The Fed has been in a really hawkish mood, and this data release will do nothing to deter it,” said Paul Ashworth, chief US economist at Capital Economics. Federal Reserve officials reiterated their support for significantly raising interest rates and keeping borrowing costs high enough to ensure inflation eases.

Investors had hoped that the easing of inflationary pressures would lead to a pullback by the Federal Reserve. Those hopes were dashed when Chairman Jerome Powell said in August that rates would remain high.

Federal Reserve Chairman Jerome Powell (Reuters/Elizabeth Frantz/File)
Federal Reserve Chairman Jerome Powell (Reuters/Elizabeth Frantz/File)

Polls show that traders expect the Fed to raise interest rates this month for the fifth time this year and by 0.75 percentage points, three times its usual margin. After that, the US central bank is expected to keep interest rates steady until the first half of 2023.

In energy markets, benchmark US crude fell 41 cents to $87.37 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 99 cents to $87.78 on Monday. Brent crude, the price basis for international oil trade, fell 50 cents to settle at $93.50 a barrel in London. In the previous session, it rose $1.16 to $94.

(with information from AP)

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