*U.S. CPI rose 8.3% year-on-year in August
*Dow Jones Industrial Average plummeted 1,200 points, the largest single-day decline since June 2020
* The probability of the Federal Reserve hike 100 basis points sharply rise
Inflation is difficult to fade, investors are worried that Federal will continue to increase significantly hike against inflation, and the Dow Jones Industrial Average once again plunges thousands of points. As of the close, the Dow Jones Industrial Average dropped 1276.4 points, or 3.9%, to 31105.0 points; the S&P 500 index was 3932.7 points, down 177.7 points or 4.3%; the Nasdaq fell 632.8 points, or 5.2%, to close at 11633.6 points. 's three major stock indexes all hit their biggest single-day decline since June 2020.
US Treasury yield rose sharply, with the 10-year US Treasury yield hitting 3.46% during the day, and is heading towards the year-on-year high of 3.482%. The two-year US Treasury yield closed at 3.754%.
technology stock was severely sold off, with Meta plummeting 9.4% to its low in April 2020, Amazon fell 7.1%, Apple and Microsoft fell 5.9% and 5.5% respectively, Tesla fell 4%; chip stocks were under pressure, Nvidia fell 9.5%, hitting a new low of one and a half years, and Chaowei Semiconductor fell 9.0%.
S&P 500 index component stocks fell, and the major stock index erased the rebound in recent days. Art Cashin, head of intraday business at UBS , said that the market may retest the June low, and the S&P 500 index fell below 3,700 points in mid-June. Matt Peron, director of research at Janus Henderson Investors, said that the latest CPI report is undoubtedly bad for the stock market. A hotter than expected inflation means the Fed will continue to raise interest rates, the stock market is facing continuous pressure, and the desire for policy shifts in the short term will be delayed.
USD index rose 1.42% to 109.87, approaching the 110 mark again.
Inflation is high and does not decline
Food and rent prices rise, offsetting the impact of the sharp decline in gasoline prices, and inflation is still operating at a 40-year high. Data released on the 13th local time showed that the consumer price index (CPI) in 18 rose 0.1% month-on-month after quarter-on-quarter adjustment, with an expected value of 0.1% lower , and the year-on-year increase slowed to 8.3%; excluding food and energy prices, the html core CPI in 18 rose 0.6% month-on-month, higher than the previous value of 0.3%, and rose 6.3% year-on-year, with the previous value of 5.9%, which means that the price pressure is expanding.
The probability of the Federal Reserve raising interest rates by 100 basis points has risen sharply
Previously, the market expected inflation to peak and began to cool down in August. This unexpectedly exceeded expectations data made investors realize the reality, and it is unlikely that the Fed's "throttle" of interest rate hikes may be relaxed. As of the close, according to the CME Group's interest rate observation tool (FedWatch Tool), traders completely ruled out the possibility of 50 basis points hikes, with the probability of 75 basis points hikes at 66%, and the probability of 100 basis points hikes at 34%.
Montreal Bank US interest rate strategy director Ian Lyngen told First Financial reporter that there is no doubt that 75 basis points will be raised next week, and the current debate lies in where the end of this round of interest rate hikes. "Before today's inflation data was released, we expected the interest rate peak to be between 4.0% and 4.25%. Now the cautious approach is to increase another 25 basis points. It is expected that the Federal Reserve will raise interest rates to 4.25% and 4.50%. The Federal Reserve is catching up with market pricing." Looking ahead to the next three interest rate meetings, Lingen said that the basic situation is that the Federal Reserve will raise interest rates by 75 basis points, 75 basis points and 50 basis points respectively.
Global stock allocation hit a low
Bank of America 9 Global Fund Manager Survey showed that fund managers were in a strong bearish mood, and the proportion of cash holdings in rose to 6.1%, a new high since 2001, while global stock allocation was at a historical low. 272% of respondents expect the economy to weaken further next year, hawkish central bank , geopolitics and high inflation are the three major risks, and 79% of respondents expect inflation to fall in the next 12 months. In addition, the survey also found that the most crowded deal is longing the dollar, which is often regarded as a safe haven during difficult economic times.
