The poor August consumer price index (CPI) report, which revealed that inflation is hardly slowing down in the U.S., sent stock markets into a tailspin on September 13.
CPI barely decreased in August, rising 8.3% y/y; economists had anticipated a decline to at least 8%. Expectations for a 0.1% reduction in the CPI on a month-over-month basis were shattered by a 0.1% increase.
The S&P 500 was down by 2.4%, the Dow Jones Industrial Average was down 2%, and the tech-heavy Nasdaq Composite was down more than 3% in the opening minutes of trade.
On 13 September, Treasury yields spiked sharply, and the inverted yield curve only grew steeper, heightening concerns about an impending recession.
Expect the stock market volatility to continue this month, as another 75 basis point Fed rate hike is a given.
Market investors are increasingly aware that the Fed's current tightening policy has not been sufficient to reduce inflation and cool the economy.
In a recent address, Powell advised strongly against premature policy easing.
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