US Stock Markets Go Down: Inflation Becomes "Public Enemy No. 1" for Wall Street

The US stock market is trending downwards.

US Stock Markets Go Down: Inflation Becomes "Public Enemy No. 1" for Wall Street

The US stock market is trending downwards. On the one hand, the lower inflation rate is being torpedoed again by the rise in consumer prices. Disappointment is spreading on Wall Street.

The prospect of the Fed continuing to raise interest rates at a high rate is driving Wall Street investors away. The Dow Jones index slipped by 3.9 percent to 31,105 points with the interest rate hikes still being fueled. The S

"Inflation is public enemy #1 for the Fed," said Priya Misra, senior investment strategist at brokerage firm TD Securities. The latest data increased the pressure on the US Federal Reserve to further tighten monetary policy. The inflation rate fell to 8.3 percent from 8.5 percent year-on-year, according to the data. Analysts had expected a value of 8.1 percent. In addition, the core rate, which excludes strongly fluctuating food and energy prices, rose surprisingly sharply to 6.3 percent. "Anyone who thought that inflation would go down just because the Fed hiked rates a few times is pretty ignorant of how the economy works," said Doug Fincher, portfolio manager at wealth manager Ionic.

Against this background, the majority of stockbrokers continue to expect the US Federal Reserve Bank to raise interest rates by 0.75 percentage points in the coming week. In the meantime, however, they also consider an increase of a full percentage point to be possible. They see the probability of this happening at 20 percent. This helped the dollar index, which tracks rates against major currencies, up 1.3 percent to 109.57 points. Because the appreciation of the world's leading currency makes gold less attractive for investors outside the USA, the precious metal lost 1.2 percent to $1,703 per troy ounce (31.1 grams). In addition, due to rising yields, bonds are becoming increasingly competitive as an investment alternative.

On the stock market, investors parted with technology stocks in particular. The shares of Amazon, Apple, Netflix, Facebook operator Meta and Google parent Alphabet fell by up to eight percent. According to experts, rising inflation and higher interest rates will devalue the future profits of these high-growth companies. Retailers like Walmart and Target also came under selling pressure. Their shares lost up to 3.6 percent. Investors feared that the surprisingly high US inflation would put consumers in a bad mood to buy.

Private consumption is the mainstay of the world's largest economy. Recession fears also shaped the price development of numerous other sectors. The shares of the aircraft manufacturer Boeing, the car company General Motors (GM), the restaurant chain McDonald's, the airline United and the cruise operator Carnival fell by up to 6.5 percent.