Wall Street indicators are widening on Friday, with investors wary of announcing higher-than-expected inflation data for May, indicating that the US Federal Reserve should continue to push the “brake” to bring inflationary pressures under control.
Wall is retreating for the third consecutive session, with the Dow falling by 700 points, while losses for the S&P 500 and Nasdaq are over 2%.
In particular, o US inflation in May climbed on new high 40 yearsraising the chances of the Federal Reserve launching more aggressive interest rate hikes in the coming months in a bid to curb prices.
THE consumer price index increased by 8.6% compared to a year earlier, after rising 8.3% last month, according to the US Department of Commerce. This is the highest level of inflation since 1981.
From last month, the index increased by 1%exceeding analysts’ estimates that expected it to increase by 0.7% according to a Wall Street Journal poll.
The structural index, which does not include energy and food, increased by 0.6% from month to month and 6% from a year earlier, slowing slightly from 6.2% in the previous month.
The fact that inflation remains on an upward trajectory frightens investors about the Fed’s aggression in the interest rate hike that has begun.
The federal bank has already raised its key interest rate by 0.75% and two more increases of 0.5% each in the next two meetings, next week and in July, are considered a given.
“One can easily see the scenario where supply shocks will continue to push inflation to higher levels, despite the Fed tightening monetary policy,” Nancy Davis, founder of Quadratic Capital Management, said in an e-mail.
“A stagnant environment is negative for investment. Stocks and bonds are falling at the same time and the supposedly all-weather 60/40 portfolio is not ready for stagnant inflation,” she said.
His performance 10-year US government bond gained 3 basis points at 3.073%, the highest level since May 11, as the European Central Bank announced on Thursday that it is ending its bond-buying program and is preparing to raise interest rates. The ECB has confirmed that it intends to raise interest rates by 25 basis points in July and possibly again in September.
In the meantime dollar is currently strengthening by 0.8%.
Indicators – Statistics
On the dashboard, the industrial Dow loses 2.26% or 730 points at 31,650, the broadest index S&P 500 falls by 2.4% to 3,920 points, while the biggest losses are recorded by the technologically weighted Nasdaq which plunges 2.85% to 11,420 points.
From 30 shares that make up the Dow only Chevron resists and remains on positive ground. Dow Inc., Salesforce, Microsoft and Goldman Sachs recorded losses of more than 3%, while Apple is also close, losing 2.76%.
Goldman Sachs downgraded the securities of a number of internet companies to “sell”, a fact that puts a lot of pressure on these shares. Thus, Netflix Inc. moving to -5.6%, Roblox Corp. falls close to 7% and eBay is down -3.3%. Frontdoor Inc. also declined and lost 4.5%.
DocuSign Inc. collapses by more than 21%, after the electronic documents company failed to achieve the estimated profits of the first financial quarter of the financial year.
Source: Capital
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