Market Plunges: Massive Sell-off After US Inflation

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The market crashes, with all three major indices reflecting sell-offs. Panic returned to Wall Street after the release of the US inflation report unraveled expectations that soaring prices were cooling off. The Dow Jones falls sharply 859 points two hours after opening, while the Nasdaq reflects a sharp drop of 492 points or 4%. And the S&P 500 is down 126 points, or 3%. 

And it is that the drop in gasoline prices and a slight improvement in supply chains made investors anticipate that the United States Federal Reserve would have less pressure to continue making such harsh adjustments in interest rates by the end of the year , despite the fact that the officials of the central bank ratified that it would continue the aggressive policy against inflation. 

US inflation in August stood at 0.1%, when it was expected to fall 0.1%. Which indicates that prices rose annually at a rate of 8.3%, more than the expected 8%. While the core, which excludes volatile food and energy costs, increased 0.6%, when it was estimated that it would rise 0.3%, to place the annual index at 6.3%, above the 5.9% in which it was located in July. 

“70% of the IPC basket is experiencing an annualized price increase of more than 4% per month. Until the Fed can tame that beast, there is simply no room for a discussion of pivots or pauses," Bloomberg quoted a note to clients from Seema Shah, chief global strategist at Principal Global Investors. The surprise data hit the Nasdaq hard, as large and fast-growing companies are usually the most vulnerable to liquidity constraints and moments of risk aversion. 

Apple (NASDAQ:AAPL) fell 2%, after rising after its iPhone 14 launch, while Amazon (NASDAQ:AMZN) and Meta (NASDAQ:META) fell between 5% and 6%. Nvidia (NASDAQ:NVDA) and AMD (NASDAQ:AMD) also lost 5%. While Tesla (NASDAQ:TSLA) and Microsoft (NASDAQ:MSFT) lost 2%. After this inflation report is assimilated and the next adjustment by the Fed on September 21, of surely another 75 bp, the next catalyst for the market will be the earnings of this third quarter that is about to end.
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