US Market tumbles after red-hot inflation data

The US stock market finished session steep lower on Tuesday, 13 September 2022, as risk aversion selloff triggered across the board, after a hotter than expected inflation report solidifying the chances of aggressive rate hikes from the Federal Reserve.

At the close of trade, the Dow Jones Industrial Average index stumbled by 1,276.37 points, or 3.94%, to 31,104.97. The S&P500 index was down 177.72 points, or 4.32%, to 3,932.69. The tech-heavy Nasdaq Composite Index stumbled by 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 issues all plummeted more than 5%.

 

The Fed, which has raised benchmark borrowing costs four times this year, is due to announce its next policy decision on Sept. 21. 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.

Also, worries persist in the financial market 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.

ECONOMIC NEWS: The Labor Department's highly anticipated report on consumer price inflation in the month of August released on Tuesday, showing consumer price index inched up by 0.1% in August after coming in unchanged in July. Compared to the same month a year ago, consumer prices were up by 8.3% in August, reflecting a slowdown from the 8.5% spike in July. The report also showed core consumer prices, which exclude food and energy prices, climbed by 0.6% in August after rising by 0.3% in July. Meanwhile, the annual rate of growth by core consumer prices accelerated to 6.3% in August from 5.9% in July.

COMMODITY NEWS: Crude oil prices swung lower after the inflation data and renewed COVID-19 curbs in China. U.S. crude settled down 0.54% at $87.31 per barrel and Brent settled at $93.17, down 0.88% on the day.

Among Indian ADR, ICICI Bank dropped 1.6% to $22.80, Azure Power Global fell 5.4% to $5.26, WNS Holdings sank 1% to $86.14, and Wipro shed 3% to $5.13. HDFC Bank sank 0.1% to $65.25, and INFOSYS was down 3.5% at $18.56. Tata Motors shed 2.5% to $28.02 and Dr Reddy's Labs dropped 2.3% to $52.74.

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