On Tuesday morning, we saw a tumble in stock futures after CPI for August came in higher than anticipated. It was the worst day for the stock market in 2 years.
As reported, headline inflation increased 0.1% month over month. Monthly changes in core inflation were up 0.6%.
For sure, the numbers were disappointing. Economists expected headline inflation to fall by 0.1% and core inflation to rise by 0.3%.
- The tumble caused a $93 billion loss for the richest Americans, according to statistics. After the sharp fall, US indexes are now looking flat.
- After July’s release, global eyes were fervently anticipating the August report. August’s CPI report, as considered by some, was decisive for the future of the US economy.
Markets react to the release date, but maybe not as much as the actual released number. Following a relieving release last month, economists were upbeat about August’s inflation report, despite a sharp drop in gas prices. Gas price declines are usually a good indicator of easing inflation, but not this time.
Rising costs for rent and healthcare are the apparent culprits behind the increase.
The S&P 500 closed at 3946.02 yesterday. It will be interesting to see how the market opens and performs today.
If no sign of correction is seen before the market closes tomorrow, bears might actually initiate a long-term sell off next week.
