https://sputnikglobe.com/20220610/wall-street-takes-hardest-knock-in-3-weeks-as-runaway-us-inflation-scares-investors-1096199055.html
Wall Street Takes Hardest Knock in 3 Weeks as Runaway US Inflation Scares Investors
Wall Street Takes Hardest Knock in 3 Weeks as Runaway US Inflation Scares Investors
Sputnik International
NEW YORK (Sputnik) - Wall Street took its biggest battering in three weeks as blue chips to technology stocks were routed on Friday after latest inflation data... 10.06.2022, Sputnik International
2022-06-10T17:18+0000
2022-06-10T17:18+0000
2022-08-06T13:36+0000
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wall street
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The three major US stock indices - comprising the Dow Jones Industrial Average Index, the S&P 500 and the Nasdaq Composite Index - were down 2.7% on the average by 12:00 PM Eastern US Time (16:00 Greenwich Mean Time). This was the sharpest one-day drop on Wall Street since May 18.The US Consumer Price Index grew by 8.6% during the year to May, expanding by its fastest rate since 1981, as the cost of virtually everything - from food to fuel, shelter and clothing - rose again last month, the Labor Department said.Separately, the University of Michigan said its closely-followed US Consumer Sentiment Index hit a record low in its latest survey for June as Americans become increasingly disillusioned with inflation taking a bigger bite of their paychecks each month.The Federal Reserve’s tolerance for inflation is 2% per year and the US central bank has vowed to raise interest rates throughout the year and even slow the economy, if necessary, to reduce inflation.After leaving interest rates at between zero and 0.25% for a period of two years due to the coronavirus outbreak, the Federal Reserve raised them for the first time to 0.5% in March and subsequently to 1% in May. The Federal Reserve committee dealing with interest rates is scheduled to meet five times between June and December. If each of those meetings ends up with a half-point percentage hike, US interest rates could be as high as 3.5% by the end of 2022, versus just 0.25% in February.Prior to this year, Wall Street had experienced a bull run that lasted for more than a decade as investors poured money nonstop into an equity market fueled by cheap credit and stable US growth. Even as the coronavirus outbreak in 2020 disrupted the rally by several months, investors returned on the promise of hundreds of billions of dollars of relief aid for the economy and markets.However, fears of inflation have throttled Wall Street’s three main indexes since the beginning of the year.In Friday’s session, the S&P 500, representing the top 500 US stocks, was down almost 18% on the year, nearing the annual drop of 20% it showed in late April. By general market definition, any asset that loses 20% or more of its value from its most recent high is defined as being in a bear market.The Dow Jones Industrial Average, comprising stocks of 30 large US corporations, showed an annual loss of 13%.The Nasdaq Composite, which comprises marquee technology names such as Amazon, Apple, Netflix and Google, showed a year-to-date loss of 27%.
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Wall Street Takes Hardest Knock in 3 Weeks as Runaway US Inflation Scares Investors
17:18 GMT 10.06.2022 (Updated: 13:36 GMT 06.08.2022) NEW YORK (Sputnik) - Wall Street took its biggest battering in three weeks as blue chips to technology stocks were routed on Friday after latest inflation data came in at 41-year highs, suggesting the Federal Reserve will get even more aggressive with interest rate hikes.
The three major US stock indices - comprising the Dow Jones Industrial Average Index, the S&P 500 and the Nasdaq Composite Index - were down 2.7% on the average by 12:00 PM Eastern US Time (16:00 Greenwich Mean Time). This was the sharpest one-day drop on Wall Street since May 18.
“A hot inflation report removed any chance for the Fed to pause tightening in September,” Ed Moya, analyst at online trading platform OANDA, said. “The Fed’s latest mistake is that they did not act strongly to cool inflation, and they will now be forced to deliver more rate hikes as inflation is clearly not transitory and not ready to peak.”
The US Consumer Price Index grew by 8.6% during the year to May, expanding by its fastest rate since 1981, as the cost of virtually everything - from food to fuel, shelter and clothing - rose again last month, the Labor Department said.
Separately, the University of Michigan said its closely-followed US Consumer Sentiment Index hit a record low in its latest survey for June as Americans become increasingly disillusioned with inflation taking a bigger bite of their paychecks each month.
The Federal Reserve’s tolerance for inflation is 2% per year and the US central bank has vowed to raise interest rates throughout the year and even slow the economy, if necessary, to reduce inflation.
After leaving interest rates at between zero and 0.25% for a period of two years due to the coronavirus outbreak, the Federal Reserve raised them for the first time to 0.5% in March and subsequently to 1% in May. The Federal Reserve committee dealing with interest rates is scheduled to meet five times between June and December. If each of those meetings ends up with a half-point percentage hike, US interest rates could be as high as 3.5% by the end of 2022, versus just 0.25% in February.
Prior to this year, Wall Street had experienced a bull run that lasted for more than a decade as investors poured money nonstop into an equity market fueled by cheap credit and stable US growth. Even as the coronavirus outbreak in 2020 disrupted the rally by several months, investors returned on the promise of hundreds of billions of dollars of relief aid for the economy and markets.
However, fears of inflation have throttled Wall Street’s three main indexes since the beginning of the year.
In Friday’s session, the S&P 500, representing the top 500 US stocks, was down almost 18% on the year, nearing the annual drop of 20% it showed in late April. By general market definition, any asset that loses 20% or more of its value from its most recent high is defined as being in a bear market.
The Dow Jones Industrial Average, comprising stocks of 30 large US corporations, showed an annual loss of 13%.
The Nasdaq Composite, which comprises marquee technology names such as Amazon, Apple, Netflix and Google, showed a year-to-date loss of 27%.
