Dow falls almost 700 points as investors freak out over U.S. inflation's biggest gain in almost 12 years - Financial Post

Rabu, 12 Mei 2021

Dow falls almost 700 points as investors freak out over U.S. inflation's biggest gain in almost 12 years - Financial Post

Confirming the markets' worst fears

Author of the article:

Reuters

Koh Gui Qing

The gyrations in financial markets underscored concerns among some investors that the Federal Reserve could be wrong in its prediction that inflation pressures in the United States are "transitory," and that the central bank may have to raise rates sooner than it currently expects to. Photo by Michael Nagle/Bloomberg

NEW YORK — U.S. stocks fell again on Wednesday as benchmark Treasury yields jumped after data showed consumer prices unexpectedly rose by the most in nearly 12 years in April, prompting bets on earlier interest rate hikes.

Moments after data showed the U.S. consumer price index jumped 0.8 per cent last month, outpacing a 0.2 per cent forecast, the dollar spiked, only to tumble minutes later to stand little changed.

We've been warning about the prospect of higher for longer inflation in the United States for many months, but even we hadn't predicted this
James Knightley, chief international economist at ING Group

Wall Street closed lower on Wednesday with the S&P suffering its biggest one-day percentage drop since February.
The Dow Jones Industrial Average fell 682.09 points, or 1.99 per cent, to 33,587.07, the S&P 500 lost 89.2 points, or 2.15 per cent, to 4,062.9 and the Nasdaq Composite dropped 357.75 points, or 2.67 per cent, to 13,031.68.

The gyrations in financial markets underscored concerns among some investors that the Federal Reserve could be wrong in its prediction that inflation pressures in the United States are “transitory,” and that the central bank may have to raise rates sooner than it currently expects to.

“We’ve been warning about the prospect of higher for longer inflation in the United States for many months, but even we hadn’t predicted this,” said James Knightley, chief international economist at ING Group, adding that there is evidence of “broadening price pressures.”

“We increasingly doubt the Fed’s position that this is transitory and think they will end up hiking rates far sooner than 2024.”

Market-leading mega-caps, including Amazon.com Inc, Apple Inc, Alphabet Inc, Microsoft Corp and Tesla Inc, weighed heavily as investors shied away from what many feel are inflated valuations.

“The CPI number being stronger than expected has led to further weakness in tech stocks,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. “Tech investors are concerned that higher rates are going to lead to multiple compression and less attractive valuations for tech names in a higher rate environment.”

Bumble Inc slipped ahead of the online dating platform’s first-quarter results expected after the closing bell.

First-quarter earnings season is on the wane, with 456 constituents of the S&P 500 having reported. Of those, 86.8 per cent have beaten consensus estimates, according to Refinitiv IBES.

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https://news.google.com/__i/rss/rd/articles/CBMiWGh0dHBzOi8vZmluYW5jaWFscG9zdC5jb20vaW52ZXN0aW5nL2luZmxhdGlvbi1mZWFycy1zcG9vay11cy1zdG9ja3MtdHJlYXN1cnkteWllbGRzLWp1bXDSAYYBaHR0cHM6Ly9maW5hbmNpYWxwb3N0LmNvbS9pbnZlc3RpbmcvaW5mbGF0aW9uLWZlYXJzLXNwb29rLXVzLXN0b2Nrcy10cmVhc3VyeS15aWVsZHMtanVtcC93Y20vMWZiODJiM2EtNTRkYi00NTMxLTg4OWQtZDdhY2Y2MDNmNzkxL2FtcC8?oc=5

2021-05-12 20:15:00Z
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Rabu, 12 Mei 2021