US stock markets experienced a mixed trading session on Wednesday as anticipation mounted for the release of the July CPI (Consumer Price Index) report.
Market participants are optimistic that a moderation in inflation will prompt the Federal Reserve to conclude its ongoing interest rate hike campaign.
August has proven to be a challenging month thus far for equities, as the previous summer rally has lost momentum.
American stocks declined on Wednesday as investors awaited crucial inflation data set to be unveiled on Thursday morning.
The major indices closed in negative territory, extending the week’s selling pressure and struggling to regain ground amid a difficult August for investors, following a robust performance earlier in the summer.
Economists surveyed by Dow Jones anticipate a 3.3% year-on-year acceleration in inflation for July, while economists at the Cleveland Fed project a 3.4% increase. Both forecasts slightly surpass the inflation figures reported in June, which saw a 3% price surge.
Investors are hopeful that more subdued inflation data could sway the Federal Reserve to conclude its campaign of raising interest rates, a development that would likely benefit the stock market.
Central bankers will also take into account August’s inflation and employment data when formulating policy decisions next month.
However, the market has already factored in an 87% likelihood of interest rates remaining unchanged at the September Federal Open Market Committee (FOMC) meeting, according to the CME FedWatch tool.
In the interim, attention is focused on The Walt Disney Company, which is scheduled to announce earnings after the market closes.
Shares of the entertainment conglomerate have declined by 18% over the past year as it grapples with earnings growth challenges in an uncertain macroeconomic environment.
Here’s the snapshot of US index performance at the close on Wednesday:
- S&P 500: 4,467.84, down 0.7%
- Dow Jones Industrial Average: 35,123.95, down 0.54% (190.54 points)
- Nasdaq Composite: 13,722.02, down 1.17%
Here are other notable developments from the day:
- Fundstrat predicts a substantial market rally following this week’s inflation report.
- The freight industry’s downturn worsens as the economy undergoes a correction from the pandemic-induced trucking surge.
- The resumption of student loan payments is not expected to weigh on the US economy, according to Ned Davis Research.
- Leading economist Paul Krugman attributes much of the food inflation to Russia.
- A new executive order from President Biden is set to make it more challenging for US firms to invest in Chinese markets.
- Pressure mounts in the commercial real estate sector, leading major banks to shed these loans.
- Surging energy worker strikes in Australia propel natural gas prices higher.
In the world of commodities, bonds, and cryptocurrencies:
- West Texas Intermediate crude oil climbs 1.52% to reach $84.20 per barrel. Brent crude, the international oil benchmark, rises by 1.4% to hit $87.41.
- Gold experiences a 0.52% decline, settling at $1,949.80 per ounce.
- The yield on the 10-year Treasury falls by two basis points to 4.004%.
- Bitcoin retreats by 1.6% to reach $29,402.
(Original Article Source: Business Insider)
