The jump in inflation in October hit investment psychology on Wednesday, pushing the index even further from record highs just two days ago, as it revived concerns that the Federal Reserve may be forced to accelerate its monetary policy tightening. development that could hit the current upward trend of equity values.
Today’s session started numbly with investors moving at yesterday’s slightly downward pace, focusing on the data on inflation announced shortly before the start of trading by the US Department of Commerce.
However, sellers gradually widened their lead over buyers, as inflation climbed to a three-decade high in October, raising the chances of the US Federal Reserve taking swift action to deal with the explosive rise in prices. interest rate sooner than investors expect.
It is noted that the consumer price index increased by 6.2% compared to October 2020, while compared to September the index increased by 0.9%, showing the largest monthly increase in the last four months. The structural index, which does not include food and energy, increased by 0.6%.
Analysts’ average estimates in a Bloomberg poll put the annual increase at 5.9%, up 0.6% from the previous month.
Additional pressure on equity values was exerted by the increase in the yields of long-term government bonds, which took the rise after the data on inflation, mainly affecting the technological securities that are particularly sensitive to these changes.
It is noted that the yield of the American 10-year climbed to 1.560% marking its largest daily rise since February 25, while the yield of the American 30-year jumped to 1.920%, recording the biggest “jump” since March 12 this year.
Indicators – statistics
In the midst of this climate, Wall Street indexes suffered significant losses today and moved even further away from the historical highs recorded on Monday, with the S&P 500 and Nasdaq even recording their worst day in five weeks
More specifically, the Dow Jones industrial average lost 240.04 points or 0.66% today and closed at 36,079.94 points, while the broader S&P 500 lost 0.81% and finished at 4,647.26 points, which is the worst performance since the beginning of October.
The strongest pressure, however, was received today by the Nasdaq technology index, which fell 263.8 points or 1.66%, to close at 15,622.70 points, marking the worst performance since October 4, when it recorded losses of 2%.
Of the 30 shares of the blue chips index, 12 closed with gains, while the rest ended in “red.” The biggest gains were made by the titles of Merck (1.57%), Visa (1.19%) and Johnson & Johnson (1.08%), while sales of Salesforce (-3.24%), Nike (-3.20%) and Apple (-1.92%) led the losses.
In the individual shares, with a “jump” of 28%, the Rivian share made its debut on the Nasdaq board.
The DoorDash share also recorded strong gains of over 11%, as it announced that it is acquiring the European food distribution startup Wolt, which is estimated to “upgrade” it to a world-class player.
On the other hand, the title of Disney fell 0.4%, pending the announcement of the results of the fourth quarter, after the end of the session.