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Wall St tumbles to biggest loss in two years following CPI data

Stock Markets Sep 13, 2022 06:41PM ET
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© Reuters. FILE PHOTO: A trader works, as Federal Reserve Chair Jerome Powell is seen delivering remarks on a screen, on the floor of the New York Stock Exchange (NYSE) in New York City, U.S. May 4, 2022. REUTERS/Brendan McDermid
 
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By Stephen Culp

NEW YORK (Reuters) - A broad sell-off sent U.S. stocks reeling on Tuesday after a hotter-than-expected inflation report dashed hopes that the Federal Reserve could relent and scale back its policy tightening in the coming months.

All three major U.S. stock indexes veered sharply lower, snapping four-day winning streaks and notching their biggest one-day percentage drops since June 2020 during the throes of the COVID-19 pandemic.

Surging risk-off sentiment pulled every major sector deep into negative territory, with interest-rate-sensitive tech and tech-adjacent market leaders, led by Apple Inc (NASDAQ:AAPL), Microsoft Corp (NASDAQ:MSFT) and Amazon.com Inc (NASDAQ:AMZN) weighing heaviest.

"(The sell-off) is not a surprise given the rally running up to the data," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

The Labor Department's consumer price index (CPI) came in above consensus, interrupting a cooling trend and throwing cold water on hopes that the Federal Reserve could relent after September and ease up on its interest rate hikes.

Core CPI, which strips out volatile food and energy prices, increased more than expected, rising to 6.3% from 5.9% in July.

The report points to "very persistent inflation and that means the Fed is going to remain engaged and raise rates," Nolte added. "And that’s an anathema to equities."

Financial markets have fully priced in an interest rate hike of at least 75 basis points at the conclusion of the FOMC's policy meeting next week, with a 32% probability of a super-sized, full-percentage-point increase to the Fed funds target rate, according to CME's FedWatch tool. [FEDWATCH]

"The Fed has increased (interest rates) by three full percentage points in the last six months," Nolte said. "We have not yet felt the full impact of all those increases. But we will feel it."

"We are at recession’s doorstep."

Worries persist that a prolonged period of policy tightening from the Fed could tip the economy over the brink of recession.

The inversion of yields on two- and 10-year Treasury notes, regarded as a red flag of impending recession, widened further. [US/]

The Dow Jones Industrial Average fell 1,276.37 points, or 3.94%, to 31,104.97, the S&P 500 lost 177.72 points, or 4.32%, to 3,932.69 and the Nasdaq Composite dropped 632.84 points, or 5.16%, to 11,633.57.

All 11 major sectors of the S&P 500 ended the session deep in red territory.

Communications services, consumer discretionary and tech shares all plummeted more than 5%, while the tech subset semiconductor sector sank 6.2%.

Declining issues outnumbered advancing ones on the NYSE by a 7.76-to-1 ratio; on Nasdaq, a 3.64-to-1 ratio favored decliners.

The S&P 500 posted 1 new 52-week high and 16 new lows; the Nasdaq Composite recorded 29 new highs and 163 new lows.

Volume on U.S. exchanges was 11.58 billion shares, compared with the 10.33 billion average over the last 20 trading days.

Wall St tumbles to biggest loss in two years following CPI data
 

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Comments (44)
Jose Maria Orti Bueno
Jose Maria Orti Bueno Sep 14, 2022 3:25AM ET
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Investors vs Fed. Wrong fight
Ken Roth
Ken Roth Sep 14, 2022 2:30AM ET
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Here is short lesson in how current inflation is created for the uneducated.  Russia has with their war on ukraine destroyed the world energy market causing the inflation because Oil and gas prices have increased alone gas prices have increased 500% the past 6 months.  The price of Oil and gas have major impact on the cost of producing goods all around the world and the current value of dollars (due to higher interest rates) to other currencies makes it even worse and more costly to produce their goods which means they have to raise prices towards the consumer and therefore we get high inflation. When oil prices are falling it will help the foreward CPI data, but we are still operating with August data not september data.  Biden is just trying to fight it by releasing US stockpiles to help the consumer with lower cost on the gas station primarily. MAGA fans persist in lack of understanding of how inflation works which confuse the pictureplay stay on fox news not this forum.
perplexed76 .
perplexed76 . Sep 14, 2022 2:30AM ET
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Russia was embedded in the world economy, instead of earning money and giving it to people, putin preffered to start a war.
Jay Garrelts
Jay Garrelts Sep 14, 2022 1:17AM ET
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Thanks Trump and Biden for doubling our nation’s money supply
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Ken Roth
Ken Roth Sep 14, 2022 1:17AM ET
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Jo Riley   Offcourse fu... the US nature typical MAGA point. We do not need green energy lets just hire some more people to dig coal and drill for oil regardsless of our nature which is the Keystone pipeline problem. I am sure Biden would love to pump more oil and shale gas, however we still need to have a country afterwards where we keep our nature intact.
Ken Roth
Ken Roth Sep 14, 2022 1:17AM ET
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Typical MAGA point who cares about our nature. We do not need green energy lets just hire some more people to dig coal and drill for oil regardsless of impact on our nature which is the Keystone pipeline problem. I am sure Biden would love to pump more oil and shale gas, however we still need to have a country afterwards where we keep our nature intact.
Jack Peterson
Jack Peterson Sep 14, 2022 1:17AM ET
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Ken is a russian troll…. Beware
Ken Roth
Ken Roth Sep 14, 2022 1:17AM ET
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Jack Peterson  you must not have read my comments on MOEX index, since you can write such a stu..pid comment.
Jay Garrelts
Jay Garrelts Sep 14, 2022 1:17AM ET
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Ken Roth
Ken Roth Sep 14, 2022 12:56AM ET
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Cpi i going down over the past 2 months. Maga fans in this forum can thank putin for the inflation not uncontrolled growth created by biden
Ken Roth
Ken Roth Sep 14, 2022 12:56AM ET
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lake Tenn  0% Biden inflation. The price of Oil and gas have major impact on producing goods all around the world and the current value of dollars to other currencies makes it even worse and more costly to produce their goods, which means they have to raise prices towards the consumer and therefore we get high inflation. Russia has with their war on ukraine destroyed the energy market causing the inflation try and learn this maga fan. Biden is just trying to fight it by releasing US stockpiles to help the consumer with lower cost on the gas station primarily. If you persist spreading your deceit and lack of understand of how inflation works you only confuse the picture and should stop spreading fake news.
Yellow Owl
Mystic_Owl Sep 13, 2022 11:03PM ET
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"Biggest loss in two years" You mean the balloon that inflated when everyone was home playing stock market video game with free money?
Jitendra Jangid
Jitendra Jangid Sep 13, 2022 11:03PM ET
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how much loss
Jitendra Jangid
Jitendra Jangid Sep 13, 2022 11:03PM ET
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how much loss
Vito Tagliano
Vito Tagliano Sep 13, 2022 10:41PM ET
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Inflation Reduction ACT is working real good!
Jack Peterson
Jack Peterson Sep 13, 2022 7:38PM ET
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Thank you Biden and Manchin for the Hyperinflation Act of 2022…. Well done
Jay Garrelts
Jay Garrelts Sep 13, 2022 7:38PM ET
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Don’t forget Trump created more money in two months than since the signing of the constitution so Biden and Trump both equally worthless and responsible
Jay Garrelts
Jay Garrelts Sep 13, 2022 7:38PM ET
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lake Tenn Trumps deal with opec didn’t expire till April of this year fyi
Jo Riley
Jo Riley Sep 13, 2022 7:38PM ET
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Jay Garrelts  How did Biden's fist pump deal work out with MbS?
David Stocks
David Stocks Sep 13, 2022 7:09PM ET
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fear and greed fear wins today rime to buy
Kerry Ditto
Kerry Ditto Sep 13, 2022 7:04PM ET
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from here on, fed is irrelevant. stock market will rally regardless of whatever fed does or doesn't.
Vito Tagliano
Vito Tagliano Sep 13, 2022 6:01PM ET
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They still fighting Fed! Volcker Rule in 3…2…
 
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