Inflation causes heavy losses on US stock exchanges

EUnexpectedly high inflation caused significant price losses on the US stock exchanges on Tuesday. Especially among the technology stocks, which are considered to be particularly interest-dependent, there was great disappointment after the last four days of profits that US inflation weakened only slightly. Investors see this as an indication that the pressure on the US Federal Reserve with its tightening of monetary policy is not really easing and that a recession is still looming.

The tech-heavy one Nasdaq 100 dropped the most, by 5.54 percent to 12,033.62 points. The market-wide S&P 500 lost 4.32 percent to 3932.69 points, the most since June 2020. The Dow Jones Industrial fared little better. It fell 3.94 percent to 31,104.97 points. The price gains of the past few days are gone in one fell swoop.

Parallel to the deeply red stock markets, the US dollar and capital market interest rates in the USA rose sharply after the disappointing inflation data, which suggests that investors are expecting further significant interest rate hikes by the Fed. This is in line with the expectations of ING Bank, which expects another rate hike of 0.75 percentage points in the coming week.

ING economist James Knightley is concerned that core inflation, which the Fed regards as particularly important, has risen. Economist Bernd Weidensteiner from Commerzbank also derives a clear mandate from the US monetary authorities from the data: “The Fed must continue to step on the brakes, even at the price of a possible recession.”

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