US stocks dodge early declines after hot inflation report

Wall Street stocks rebounded from a sharp sell-off early on Thursday after the widely anticipated U.S. inflation report turned out to be hotter than expected.

The broad S&P 500 rose 2.4% in the early afternoon in New York after falling as much as 2.4% early in the session. Nasdaq Composite he rose 2%, recovering from a nearly 3.2% decline.

The latest bout of stock market volatility came after the US consumer price index reading for September was spot on. 8.2%It shows a slight easing in annual inflation from August’s 8.3%, but beats economists’ forecast of 8.1%.

Core CPI, which excludes food and energy prices, was 6.6%, beating expectations of 6.5% and the previous month’s 6.3%.

“A key aspect of today’s announcement is that core inflation has continued to rise and hit new highs. It remains a troubling part of the CPI and a major headache for central banks. and.

The dollar rose immediately after the CPI report, but then reversed its gains, falling 1% against a basket of six peers. A stronger dollar pushed the Japanese yen down to its lowest level since 1990 at 147.67 on Thursday.

British Prime Minister Liz Truss Talking about U-turn On government “mini” budgets.

Market participants are looking for signs of how aggressively the U.S. Federal Reserve (Fed) and its international institutions are tightening monetary policy, as well as reports on rising prices and employment conditions in the world’s largest economy. I’ve been scrutinizing. Concerns grew this year that a series of rate hikes aimed at curbing inflation could trigger a prolonged economic slowdown.

Thursday’s futures market showed investors had heightened expectations about how far the US central bank will raise borrowing costs, now expecting rates to be close to 4.9% by May 2023. .

The Fed has already raised the cost of borrowing by 0.75% and raised the benchmark interest rate to the range of 3-3.25% at the last three meetings. The market has priced in that he is expected to increase four times in a row by a similar size.

The Federal Reserve said in the minutes of its September monetary policy meeting released late Wednesday that the central bank is concerned Doing “too little” to eradicate soaring inflation.

“The pace of inflation remains stubbornly high, ignoring the Fed’s attempts to tighten monetary policy and push the economy down,” said Richard Flynn, managing director of Charles Schwab UK.

“Combined with rising prices and a stronger-than-expected jobs report last month, it is almost certain that the Fed will implement a fourth rate hike of 0.75 percentage points at its next meeting in November.”

U.S. Treasuries suffered a string of selloffs after the release of CPI data, boosting yields, but this eased later in the session, with U.S. 10-year yields rising 1 basis point to 3.91%. rice field. Two-year yields, which are more sensitive to interest rate expectations, rose 0.11 points to 4.41%.

Equity and bond markets have come under severe pressure this year, battered by higher interest rates and the potential for further twists in monetary policy.

Rising borrowing costs are undermining the appeal of more speculative stocks that were early winners in the coronavirus pandemic, eating into projected cash flows that are typically modeled into the future. The tech-heavy Nasdaq Composite Index is down about a third this year.

Elsewhere, the Europe region’s STOXX 600 stock index closed 0.8% higher, reversing its earlier decline. Hong Kong’s Hang Seng closed 1.9% lower than his.

In commodities, crude benchmark Brent crude rose 2.4% to $94.63 a barrel a day after Russian President Vladimir Putin defended prices last week. decision He said Opec+’s cut of 2 million barrels a day of oil production was “intended solely to balance the global market”.