The main US equity indices reacted negatively to higher-than-expected US Consumer Price Index (CPI) data on Wednesday. The two key components the market was focusing on were the yearly CPI, which came in at 9.1% versus 8.8% expected, and the core number of 5.9% versus 5.7% expected. Fed funds futures markets had been pricing a near 100% certainty that the Fed would raise rates by another 75 basis points at its July meeting. Interest rate-sensitive equities such as the Nasdaq fell sharply as more aggressive interest rate rises may now be needed. Nasdaq Futures are down 2.4% on the news. The 2-year and 10-year yields immediately spiked again by over 3%.
Stock market reaction
Equity indices immediately moved sharply lower on the release as investors see more interest rate rises ahead. The Nasdaq dropped 400 points and the S&P 500 also fell over 1% immediately on the CPI release.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Follow us on Telegram
Stay updated of all the news
EUR/USD stays defensive below 1.0700 ahead of EU inflation data
EUR/USD is trading on the back foot below 1.0700, extending its sideways movement in early Europe. The US debt deal wins the House passage. Traders refrain from placing fresh bets on the pair ahead of the EU inflation data and the US jobs data.
GBP/USD eases below 1.2450 amid a steady US Dollar, ADP eyed
GBP/USD is retreating from 1.2450 in the European morning, as the US Dollar looks to stabilize following the recent sell-off. Markets digest renewed dovish Fed expectations and US debt deal passage ahead of the top-tier US ADP jobs and ISM Manufacturing PMI data.
Gold: $1,970, looming US employment clues prod XAU/USD bulls
Gold price teases bears after keeping the buyers hopeful in the last two days, retreating from the weekly top of late. In doing so, the yellow metal justifies the market’s dicey conditions.
Bitcoin likely to remain in red through the next quarter if history is any indication
Bitcoin (BTC) price produced a monthly close at $27,210, noting a -6.92% return for May. The last-minute slide in BTC put an end to the four-month bullish streak that kickstarted the 2023 rally.
US ADP Employment, ISM Manufacturing PMI Preview: First down, then up for US Dollar? Premium
With or without the debt-ceiling crisis, the US Dollar is on the rise – but every trend has a countertrend, and a double-feature release creates opportunities. Ahead of Friday's Nonfarm Payrolls (NFP), Thursday's release of two critical leading indicators is set to rock markets.