US stocks fell on Wednesday in the wake of fresh inflation data and the release of the minutes of the Federal Reserve’s September interest rate meeting.
The The S&P 500 Index is down 11.81 points, or 0.3%, to 3,577.03, the lowest level in nearly two years. The Dow Jones Industrial Average lost 28.34 points, or 0.1%, to close at 29,210.85. The Nasdaq Composite Index fell 9.09 points, or 0.1%, to 10,417.10, a day after the technology-heavy index entered its second bear market in 2022, posting a decline of more than 20% from its recent high on August 15.
Investors were on edge this week ahead of Thursday’s US consumer price report which will shed light on the workload. Fed It was left to do to contain decades of price hikes. In recent months, inflation measures have shown Extensive pricing pressures In categories such as food and housing, while energy prices fell.
US Suppliers Increased Prices They charge customers 0.4% in September from the previous month, according to data released Wednesday. Economists polled by the Wall Street Journal had expected a 0.2% increase.
With inflation soaring in the United States, rising food and energy costs have pushed the country’s most popular price index to a four-decade high. WSJ’s Gwynn Guilford explains how the CPI works and what it can tell you about inflation. Illustration: Jacob Reynolds
Kiran Ganesh, multi-asset strategist at
UBS.
“That’s why there has been an increase in expectations … that the Fed needs to keep interest rates at a higher level for a longer period to bring down inflation.”
The Fed released a file on Wednesday afternoon September meeting minutesThis showed officials worried about persistently high inflation and predicted that lower prices and wages would likely weaken the labor market.
Strengthen the position of the Federal Reserve Recession riskBut the economy doesn’t appear to be in a single state right now, said Nicholas Reese, strategist at Merck Investments. He said the recession may actually come as late as the second half of next year. However, this likely means that the market may move along for several more months before it finally reaches a cycle low. “That’s one of the things hanging on this market,” he said.
corporate profits Over the next several weeks, it will also provide insight into how companies deal with price pressures.
Wednesday Once again raised its sales forecast Over the course of the year as it continued to drive price increases for its snacks and beverages, the shares rose $6.80, or 4.2%, to $169.39.
Traders work on the floor of the New York Stock Exchange last week.
picture:
Brendan McDermid/Reuters
The coming days will bring updates from a host of companies including
and banks such as JPMorgan Chase and Citigroup.
Mr. Ganesh said earnings estimates for the remainder of the year and 2023 are too optimistic, which poses another risk to stocks in the coming months.
“If you look at the performance of the market so far this year, you will find that it has been largely explained by the move in bond rates and yields,” Ganesh said. “Higher rates should mean lower expectations for growth and earnings, and that hasn’t been priced in the market yet.”
Investors also continue to watch the turmoil in the UK government bond markets, which has been highly volatile since the government laid out plans for deep debt-funded tax cuts last month. The Bank of England’s attempt to prevent the broader market disruption that has hit pension funds in particular has had mixed results.
On Tuesday, Bank of England Governor Andrew Bailey confirmed that the central bank intends to terminate its work Intervention in the bond market By Friday as planned, which led to a sell-off in the British pound. the message Confirmed by Bank of England officials Wednesday.
UK markets were mixed. The Pound rebounded 1.2% to $1.1099, but British government bonds, known as government bonds, remained under pressure. Britain’s 30-year Treasury yield briefly exceeded 5%, a level last seen before the central bank’s intervention. Yields rise as prices fall.
US 10-year Treasuries fell slightly to 3.901%.
“Bond markets believe the Bank of England is not doing enough,” said Viraj Patel, global macroeconomic analyst at Vanda Research. Despite the BoE’s pledge to end bond purchases, Mr. Patel still believes the central bank will step in with support if volatility threatens financial stability again.
“They are not going to allow this to get into some kind of chaos that gets out of control,” he said.
Britain’s FTSE 100 lost 0.9% to 6826.15, while the pan-European Stoxx Europe 600 lost 0.5% to 385.88.
Asian stocks were mixed. China’s Shanghai Composite rose 1.5% to 3025.51, while Hong Kong’s Hang Seng fell 0.8% to 16701.03 and Japan’s Nikkei 225 was little changed at 26396.83.
Write to Chelsey Dulaney at [email protected] and to Paul Vigna at [email protected]
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