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CPI Inflation Data Hot: Dow Jones Falls, Turns Back as Treasury Yields Fall

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CPI inflation continued to slow in September, but less than expected. Core consumer prices, which exclude food and energy, rose at the fastest annual rate since 1982. Stocks opened sharply lower after the CPI inflation report, but the Dow turned positive late in the morning. Treasury yields jumped above 4% as the data boosted expectations for a Fed rate hike, but then slid back.




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September CPI inflation came in at 8.2%, down from 8.3% in August and a 40-year high in June at 9.1%. The CPI rose 0.4% compared to August. Economists expected a monthly gain of 0.2% with the headline inflation rate dropping to 8.1%.

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There is little evidence of lower core inflation pressures.

Core CPI inflation rose 6.6%, up from 6.3% in August. That exceeds the 39-year peak in March of 6.5%. Core prices are up 0.6% compared to August. Wall Street expected a monthly rise of 0.4% and core inflation of 6.5%.

Prices for non-energy services jumped 6.7% from the previous year, the highest in decades.

This category of spending, which includes rent, medical services, transportation, and education, is associated with a narrow labor market and high wage growth. So the Fed wants to see service prices – and labor markets – cool off before pulling back from the Fed’s rate hike.

Initial jobless claims increased by 9,000 to 228,000 in the week ended October 8. Wall Street expected a slight rise in unemployment claims to 225,000.

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Fed rate hike expectations

After the CPI inflation report, it is now certain that the Federal Reserve will raise interest rates by 75 basis points for the fourth consecutive meeting in November. This is according to CME FedWatch Tool.

Markets are now expecting 75 basis points in December, which will bring the year-end fed funds range to 4.25%-4.5%.

Expectations of a Fed rate hike jumped after CPI higher than expected in August Report on September 13.

On Wednesday, the producer price index for September rose 0.4% versus August, double expectations. Wholesale inflation came in at 8.5%, down slightly from August’s 8.7% but slightly above expectations of 8.4%. Core PPI rose 0.3%, in line with the consensus. Core PPI inflation eased to 7.2% from 8.1% in August.

Fed meeting minutes

On Wednesday, the central bank released minutes from the Federal Reserve’s September 20-21 meeting. Many officials. According to the Federal Reserve’s meeting minutes, he said that “the cost of taking too little action to bring down inflation is likely to outweigh the cost of taking too much.” Many participants wanted to “calibrate” the future tightening to economic conditions.

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However, the Fed is looking for clear and convincing evidence that inflation is easing significantly before slowing the pace of rate hikes.

Dow Jones chases the lower Nasdaq

The Dow Jones Industrial Average was down 500 points at the start of the bell, falling below its September 30th low. The S&P 500 and Nasdaq Composite sold more, and also reached bear market lows.

But the major indexes rebounded, with the Dow rising 1.9%. The S&P 500 jumped 1.4% while the Nasdaq Composite rose 0.8%.

Major indices were also sold off heavily after the August inflation report on September 13th. Heading into this report, stocks rebounded on hopes of a weak inflation reading and the “Fed Pivot” for slower rate hikes. This has been the trend in the Fed’s monetary reports for the past few months, but not this time.

The main indexes fell slightly on Wednesday. The Dow was just above the two-year bear market low set on September 30th. The S&P 500 and Nasdaq hit new lows in the bear market this week.

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The 10-year Treasury yield jumped 7 basis points to 3.97%, but that’s a long way from the 13-year peak of 4.06% on the day. The 10-year yield has risen for 10 consecutive weeks.

The US dollar initially gained strength, but then reversed lower.

In a pre-market move, Dow futures rose ahead of the CPI report, while Treasury yields fell, on reports that the new British government was planning to scrap much of its budget plan, including tax cuts. This deficit-financed plan had criticized the British pound and sent yields higher, prompting the Bank of England to announce emergency bond purchases. The Bank of England says these bond purchases will come to an end.

While the UK faces its own problems, it comes amid a backdrop of Federal Reserve strength that has pushed the US dollar higher, putting pressure on markets around the world.

Please follow Ed Carson on Twitter at Tweet embed For stock market updates and more.

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MicroStrategy is at its lowest level since 2020 after the sales were revealed

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(Bloomberg) — Shares of MicroStrategy touched their lowest level since August 2020 after the enterprise software company, which in recent years has been known as the largest buyer of bitcoin, revealed its first sale of the token.

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The stock fell 1.1 percent to $136.63 on Thursday, down 75 percent this year. Bitcoin rose less than 1% to around $16,590 and is believed to have fallen 64% since the start of the year.

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In a filing on Wednesday, MicroStrategy said it acquired approximately 2,395 Bitcoin between the beginning of November and December 21 through its subsidiary MacroStrategy, and paid out approximately $42.8 million in cash. It then sold 704 of the tokens on Dec. 22 for a total of about $11.8 million, citing tax purposes, before buying another 810 of them two days later.

Matt Malley, chief market strategist for Miller Tabak + Co. Step down as CEO. This news means they don’t seem to want to do that anytime soon.”

Overall, MicroStrategy held about 132,500 bitcoins worth over $4 billion USD as of December 27th. The company paid an average purchase price of $30,397 per bitcoin.

“Given MicroStrategy’s $2.4 billion in leverage, we believe the company may have a lot of leverage over Bitcoin, and may face some liquidity risk,” Jefferies analyst Brent Thiel wrote in a note on Wednesday. Thill has an “underperform” rating on the stock and a price target of $110.

Over the years of the pandemic, MicroStrategy has become well known for its Bitcoin takeovers, largely led by Saylor. Earlier this year, Saylor stepped down from that role and now serves as CEO at the company and continues to lead its bitcoin strategy.

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MicroStrategy was trading around $120 before Saylor first announced the company’s Bitcoin purchases in 2020. The stock reached an all-time high of $1,315 in February 2021.

(Updates to include the stock’s closing price in the second paragraph.)

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Bankman-Fried May File Petition in New York Federal Court Next Week Before Judge Louis Kaplan By Cointelegraph

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Former FTX CEO Sam Bankman-Fried is set to appear in court on the afternoon of January 3 to enter a lawsuit over two counts of wire fraud and six counts of conspiracy against him related to the collapse of cryptocurrency exchange FTX, according to Reuters. mentioned on December 28, citing court records. Bankman-Fried will appear before District Judge Lewis Kaplan in Manhattan.

Judge Kaplan was appointed to hear the case on December 27 after the original judge in the case, Ronnie Abrams, Resigned herself because of connections between FTX and the law firm Davis Polk & Wardwell, where her husband is a partner. The company provided advisory services to FTX in 2021.