The latest inflation data deepened concerns about interest rate hikes, technology stocks stumbled, and U.S. stocks sold heavily on Wednesday (12), with the Dow Jones falling 681 points and the S&P 500 sinking 89.06 points, both hitting the worst single-day performance since January and February.
The Central News Agency reported that the 3 major indices fell at midday and closed near the lowest point of the day. The Dow Jones Industrial Average ended the day down 681.5 points, or 1.99%, to close at 33587.66 points. The Standard & Poor’s 500 Index sank 89.06 points, or 2.14%, to close at 4063.04 points. The technology-based Nasdaq Composite Index plunged 357.75 points, or 2.67%, to close at 13031.68.
The Dow Jones and S&P 500 indexes recorded their worst single-day performance since January and February, respectively. The two indices closed at an all-time high on the 7th, this week’s turbulence, writing the worst 3 trading days since October last year, the Nasdaq index fell by 5.2% in 3 days.
This year has been lingering in the shadow of inflation this week profound impact on the stock market, the U.S. Department of Labor in the U.S. stock market before the opening of the Consumer Price Index (CPI) data for April, as if to add insult to injury.
According to the Labor Department report, the U.S. CPI rose 4.2% in April compared with the same period last year, up from 2.6% in March, the highest annual rate of increase since September 2008; seasonally adjusted, CPI rose 0.8% in April, up from 0.6% in March. Both figures were above market expectations.
If you exclude the volatile food and energy, the so-called core prices rose 3% over the same period last year, the largest increase since 1995, showing that the 2019 coronavirus disease (COVID-19, Wuhan pneumonia) epidemic slowed down, the federal government to spread money to relieve hardship, people’s savings increased to stimulate consumer demand, while inflationary pressure is widespread and heavy.
Since the beginning of the month, heavy selling pressure on technology stocks underperformed. Apple (Apple), Amazon (Amazon.com), Microsoft (Microsoft) and other weighted stocks are down more than 2%, Google parent company Alphabet fell more than 3%, electric car maker Tesla (Tesla) fell 4.4%.
The Philadelphia Semiconductor Index plunged 4.2%, with all 30 components closing in the black. TSMC ADR fell 4.1%, and this week’s decline extended to 7.4%.
Federal Reserve Board (Fed) last March to cut the benchmark interest rate to near zero, and the scale of uncapped bond purchases to support the epidemic-stricken economy. Loose monetary policy prompted an influx of funds into the stock market, and U.S. stocks quickly escaped the trough at the beginning of the outbreak, hitting record highs in recent months.
Now inflationary pressures have increased with the economic recovery, investors are worried that the Federal Reserve will be forced to tighten monetary policy. Even though a number of Federal Reserve officials this week stressed that the economy still needs low interest rates to support, it is still difficult to alleviate investor concerns.
Reflecting market interest rate expectations, the U.S. 10-year bond yield rose after the release of the latest inflation data, from 1.62% yesterday to 1.69%, the largest one-day increase since March.
Dow Jones and S&P 500 even 3 black, respectively, from the historical closing highs pulled back 3.4%, 4%, but still up 9.7%, 8.2% since the beginning of the year, respectively.
U.S. stocks “panic index” known as the Chicago Board Options Exchange (CBOE) Volatility Index (VIX) today intraday once surpassed 28, different from the previous two months most of the time remain below 20 pattern, meaning that U.S. stocks short term volatility fears with rising inflation worries and intensify.
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