Stocks on Wall Street were repeatedly weak, with the three major indexes falling for three straight days. U.S. inflation “breaks 9”, the Bank of Canada unexpectedly raises interest rates by 1%, and the market speculates that the Federal Reserve may follow. It fell following the centimeter level. Recession fears are also growing, with the 2- and 10-year inversions the largest since 2000, often a leading indicator of recessions. The dollar strengthened further, reaching parity once morest the euro for the first time in 20 years.
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July 13 (Wednesday) Market Conditions
l Dow Jones It was down 208.54 points, or 0.67%, at 30,772.79.
l S&P 500 Index It was down 17.02 points, or 0.45%, at 3,801.78.
l Nasdaq Index It was down 17.15 points, or 0.15%, at 11,247.58.
l New York August Oil Futures It closed at $96.30 a barrel, up $0.46 or 0.48%.
l New York August futures It closed at $1,735.5 an ounce, up $10.7, or 0.6%.
l U.S. 10-year Treasury bond yield It closed at 2.904 percent, down 5.4 pips.
The United States announced the June consumer price index (CPI) inflation data, which rose by 9.1% year-on-year, higher than the market’s earlier expectation of 8.8%, and higher than the previous month’s 8.6%, continuing to hit a new high in more than 40 years. On a monthly basis, it rose 1.3%, higher than the market’s earlier expectation of 1.1% and higher than the 1.0% increase in the previous month.
In terms of core CPI, it rose 5.9% year-on-year, higher than the market’s earlier expectation of 5.7%, and lower than the previous month’s 6.0%. On a monthly basis, it rose 0.7%, higher than the market’s earlier expectation of 0.6%, and higher than the previous month’s 0.6%.
Atlanta Fed President Raphael Bostic was asked regarding the possibility of a 1 percent rate hike following the latest inflation data: “Anything is possible… Today’s numbers show that (inflation) is not going in the right direction. “
At the interest rate meeting in mid-June, Chairman Powell said that the next meeting (the end of July) will consider adding half a percent or 0.75 percent. However, the latest interest rate futures show that the market expects the Federal Reserve to raise interest rates by 1% at the end of the month more than 80% chance.
“The Fed has an inflation problem ahead and their tightening is unwavering even with some recessionary signs,” said George Goncalves, head of U.S. macro strategy at MUFG. “If the Fed raises rates to 4% and the 10-year yield stays at 3%, the inversion of the yield curve might reach 50 basis points, which would be a manifestation of a ‘quasi-stagflationary environment’.”
But some analysts have a different view. “The market is starting to believe that this is a peaking number, and there is enough data to believe that inflation data will start to pull back in the next few months,” said Andrew Slimmon, senior portfolio manager at Morgan Stanley. “If you look at every time in history that inflation has exploded, and the market believes that inflation has peaked, the stock market has also bottomed out.”
Although the pace of interest rate hikes may be further accelerated, many technology stocks still perform well, includingAmazon、Netflix、TeslaBoth rose more than 1%.The accusation once morest MuskTwitterrose nearly 8%.
The market is also concerned regarding the company’s performance.Delta AirlinesSome of the results were worse than expected, causing the stock price to drop by regarding 4.5%, dragging down other airline stocks.American airlinesfell more than 3%,United AirlinesIt also fell nearly 1%. Cruise stocks, which have been under pressure recently, also fell.Royal Caribbean Cruisesfell more than 2%,carnivalfell more than 1%.
Oil prices fell sharply in New York the previous day following data showed that high oil prices are shrinking demand. U.S. gasoline demand fell to 8.06 million bpd last week, down from the same period in 2020 and the lowest seasonal level since 1996, according to the U.S. Energy Information Administration. The four-week moving average of gasoline demand is also the lowest seasonally level since 2000, except for the same period two years ago. The holiday effect was minimal and fleeting, and the numbers now paint a clearer picture of shrinking demand amid growing fears of slowing economic growth.