Dow futures drop 400 points on hotter-than-expected U.S. inflation

On Tuesday morning, a warmer-than-expected CPI report led to a rapid turnaround in equity futures. Dow futures, which were up over 200 points just before 8:30 am EDT, fell over 300 points after release. Nasdaq 100 futures recorded a negative swing of nearly 3%.

Inflation

Megan Henney for Fox Business:

The Department of Labor said Tuesday that the Consumer Price Index, a large measure of the price of everyday goods including gasoline, groceries and rents, rose 8.3% in August over a year. does. Prices have risen by 0.1% in the one-month period since July.

These figures were both higher than the main figure of 8.1% and the monthly decline of 0.1% projected by the Refinitiv economists, likely a worrying sign for the Federal Reserve as it seeks to cool price gains and tame demand for securities. consumers.

Boiling inflation has created severe financial pressures for most US households, who are forced to pay for more basic necessities like food and rent. The burden is disproportionately borne by low-income Americans, whose already stretched paychecks are heavily impacted by price fluctuations.

CNBC:

The consumer price index, which tracks a wide range of goods and services, increased by 0.1% in the month and by 8.3% in the last year.

According to the Dow Jones estimates, economists had expected headline inflation to fall 0.1% and core inflation to rise 0.3%. The respective year-over-year estimates were for earnings of 8% and 6%.

The food index rose 0.8% in August and housing costs, which make up about a third of the CPI weight, rose 0.7% and 6.2% from a year ago.

Markets tumbled following the news, with futures linked to the Dow Jones Industrial Average down nearly 350 points after having been higher previously.

MacDailyNews takes: Shares of Apple (AAPL) are currently down $ 3.40 (-2.08%) to $ 160.03 in pre-market trading.

In January, Interactive Brokers founder Thomas Peterffy said: “1% or 2% [in interest rate hikes] it does not mean anything. If they really wanted to stop inflation, they would have to raise rates to 4%, 5%, 6%. “

The Fed’s current target interest rate range is between 2.25% and 2.50%.

It’s best to control inflation, if you know how, while you can. – MacDailyNews, May 11, 2021

Stopping the misleading crusade against domestic energy production and profligate federal spending and inflation will stop suddenly. It is not difficult. – MacDailyNews, May 11, 2022

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