S&P 500 Plunges 4%, Nasdaq Drops 5%

Barry Adams
13 Sep, 2022
New York City

Stocks plunged on Wall Street after the latest data showed how entrenched high prices have become in the broader economy. 

The today's market plunge erase gains of the last one week and the benchmark indexes dropped near to the level last seen on September 6. 

Consumer prices in August rose at a slower pace of 8.3% in August following a rise of 8.5% in July, the Bureau of Labor Statistics said Tuesday. 

On s monthly basis, prices increased 0.1% from July when prices were flat from the previous month.  

Consumer inflation advanced at a slower pace annually in August but still remained elevated and significantly above the 2% target set by the Federal Reserve.

Benchmark indexes have been rallying for a week on the hopes of cooling inflation and discouraging the Fed from lifting rates by another large amount. 

However, the latest elevated inflation report only strengthened the case for lifting key lending rates again by 75 basis points at the next Fed's meeting later this month. 

The market sentiment worsened and investors feared that the Fed may have to increase the pace and the size of rate hikes beyond 75 basis points and keep higher rates longer. 

The S&P 500 index dropped 4.3% to 3,932.69 and the Nasdaq Composite index plunged 5.2% to 11,633.57. 

The S&P 500 index and the Dow Jones Industrial Average recorded their worst day of 2022. 

Crude oil declined 21 cents to $87.56 a barrel and natural gas rose 11 cents to $8.35. 

The yield on 2-year Treasury notes rose to 3.75%, 10-year notes advanced to 3.43%, and 30-year bonds to 3.49%. 

 

European Markets Plunge After U.S. Inflation Data 

Benchmark indexes in Europe plunged after U.S. consumer inflation was higher than expected and dented the hopes of less aggressive rate hikes.

The DAX index plunged 1.4% to 13,211.26, the CAC-40 index declined 1.2% to 6,257.31, and the FTSE 100 index dropped 1.1% to 7,391.47. 

The euro edged down to $1.0003 and the British pound traded down to $1.1519. 

Brent crude oil declined $1.90 to $92.08 a barrel and TTF natural gas price gained 6% to 202.55 euros a megawatt hour. 

The bond yields rose following the U.S. inflation report. 

The yield on 10-year bonds issued by Germany rose to 1.72%, U.K. advanced to 3.17%, France gained to 2.29% and Switzerland to 1.08%.

 

UK Jobless Rate Drops to 48-Year Low 

The latest jobs market data released by the Office for National Statistics offered mixed views but supported the case for higher rates by the Bank of England. 

Jobless rate in the U.K. held steady at 3.9% in August, the number of people claiming jobless benefits rose 6,300 contrary to the expectation of a decline of 13,000, according to the data released by the Office for National Statistics. 

Unemployment rate declined to 3.6% in three months to July, the lowest since the similar three-month period in 1974. 

In August, employees on payrolls increased 71,000 from July to a record 29.7 million.

 

Italy's Jobless Rate Eases to 8.0% 

Italy's seasonally adjusted jobless rate eased to 8.0% in the second quarter ending in June from 8.8% in the first quarter ending in March, Italy's statistics office Istat reported Tuesday.     

Jobless rate in the similar period a year ago was 9.6%. 

Total employment rate increased to 60.5% in the second quarter from 59.1% in the first quarter  and the inactivity rate among the 15 to 64 age group declined to 34.2% from 35.1% in the previous quarter. 

 

Spain's Inflation Eases but Stays Near Record High 

Spain's inflation eased less than the previous estimate in August. 

Consumer prices rose 10.5% in August from a 4-decade record of 10.8% in July, the Spain's statistics office INE reported Tuesday. 

The inflation rate was previously estimated at 10.4% on August 30. 

Core inflation, excluding non-processed food and energy, increased to 6.4% from 6.1% in July, record high since January 1993. 

Housing costs soared 24.8% from a year ago, and prices of food and non-alcoholic beverages rose 13.8%.