Wall Street ends as hot inflation data raises the possibility of a steep Fed rate hike

Wall Street ends as hot inflation data raises the possibility of a steep Fed rate hike
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  • Fed fund futures are now in favor of raising interest rates to 100 bp in March
  • Hindenburg jumped on Twitter after revealing a long position
  • Delta Airlines loses Q2 profit
  • Down index: Dow 0.67%, S&P 0.45%, Nasdaq 0.15%

NEW YORK, July 13 (Reuters) – U.S. stocks fell slightly on Wednesday after investors digested expected U.S. inflation data, raising fears that the Federal Reserve could raise key interest rates by 100 basis points later this month. .

Although the three major U.S. equity indices reached lows early in the day and occasionally turned positive throughout the session, they turned red by the closing hours.

The pace of consumer price growth accelerated to 9.1% per year, the warmest reading since November 1981, due to a monthly 11.2% increase in petrol prices. Read more

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Eliminating volatile food and energy prices, which have been reduced since the report’s survey period, the core CPI has fallen to an annual rate of 5.9%.

“You would expect that the CPI (report) that we saw would be a big risk-free event, but the market shook,” said Ross Mayfield, an investment strategy analyst at Baird in Louisville, Kentucky. “(Investors) were already expecting a very sharp Fed and I don’t think it affects too much without uncertainty and with that why the market isn’t selling today.”

The report raises the possibility that the Federal Reserve will raise interest rates by more than the previously expected 75 basis points. Futures traders tied to the Fed Funds target rate have now set a price target of a larger, 100 basis points increase at the conclusion of its policy meeting later this month. Read more

“If the Fed looks past the headline numbers, they will see that commodity prices have already begun to soften somewhat since the CPI survey,” Mayfield said, adding that the 100-basis-point rate could increase based on the June CPI report. Keep the central bank’s policy “behind the curve”.

As seen in the graphic below, the core CPI confirms that inflation is set to ease from the March high, but there is still a long way to go before the central bank’s average annual 2% inflation target is reached:

The question of whether tightening the Fed’s policy can keep inflation in check without pushing the economy into recession seems to be shifting to how serious the potential for a recession can be.

Dow Jones Industrial Average (.DJI) 208.54 points or 0.67% down 30,772.79, S&P 500 (.SPX) 17.02 points or 0.45%, lost at 3,801.78 and the Nasdaq Composite (.IXIC) 17.15 points or 0.15%, down to 11,247.58.

Nine of the 11 major sectors of the S&P 500 have lost ground, including industry (.SPLRCI) And communication services (.SPLRCL) Suffering at the highest percentage rate based on consumer considerations (.SPLRCD) Have enjoyed the greatest gain.

The second-quarter earnings season will hit full speed on Thursday, with JPMorgan Chase & Co and Morgan Stanley posting results, followed by Citigroup and Wells Fargo & Co on Friday.

According to Refinitive, as of last Friday, analysts have seen an increase in overall annual S&P earnings for the April-June period at 5.7%, lower than the 6.8% forecast at the beginning of the quarter.

Shares of Delta Air Lines (DAL.N) Career earnings in the second quarter fell 4.5% after missing expectations, although chief executive Ed Bastian said strong travel demand would make the full-year profit “meaningful”. Read more

Broad S&P 1500 Airlines Index (.SPCOMAIR) Decreased by 1.7%.

Tesla Inc. advanced 1.7%, while chipmakers (.SOX) Also acquire ground.

Twitter Inc. (TWTR.N) Hindenburg Research said it jumped 7.9% after the company’s stock took a significantly longer position. Read more

Problems reducing the number of advanceers on the NYSE by a 1.37-to-1 ratio; On the Nasdaq, a 1.08-to-1 ratio is in favor of reducers.

The S&P 500 posted a new 52-week high and 41 new lows; The Nasdaq Composite recorded 16 new highs and 231 new lows.

The volume on the US exchange was 10.66 billion shares, compared to the average of 12.56 billion shares in the last 20 trading days.

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Reporting by Stephen Kalp; Additional reporting by Amruta Khandekar in Bangalore; Edited by Richard Chang

Our value: Thomson Reuters Trust Policy.

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