Great Inflation Anticipation : After a study showed Americans borrowed a record amount on credit cards last quarter, U.S. stocks slumped on Wednesday. Markets changed a day before U.S. CPI inflation numbers. The Federal Reserve’s interest rate setting may alter.
Lenox Advisors Vice President of Asset Management Jason Krupa stated, “The markets are just kind of going back and forth today.” Tomorrow, we’ll learn about July’s CPI.
On Tuesday, the New York Federal Reserve Bank reported that U.S. credit card debt reached $1 trillion. Meanwhile, Philadelphia Fed president Patrick Harker suggested the Fed may maintain interest rates.
“With oil prices going up, the customer is the backbone of the economy,” said Boston Bolvin Wealth Management Group president Gina Bolvin. Debt stops them from spending, signaling a slump.
The CME FedWatch Tool predicted an 86.5% chance of no rate hike at the September meeting. This market mood pressured rate-sensitive mega-cap growth and tech equities, which have driven Wall Street for years. Nvidia, Apple, and Tesla all dropped 0.8% to 4.8%. Thursday’s July CPI should rise slightly from last year. Like June, prices should increase by 0.2% per month.
China’s consumer business lost popularity in July. According to the National Bureau of Statistics, the second-largest economy’s consumer price index (CPI) fell for the first time since February 2021.
The Dow Jones Industrial Average (.DJI) fell 191.13 points or 0.54%. 35,123.36 was last. S&P 500 (.SPX) fell 31.67 points, or 0.70 percent, to 4,467.71. Nasdaq Composite.IXIC fell further. 13,718.40 was down 1.2%, 165.93 points.
The market fell after Moody’s downgraded many small and medium-sized banks the day before. Bank of America (BAC.N) and Wells Fargo (WFC.N) fell 0.8% on Wednesday, worsening the pattern. Perseverance grew. Energy stocks (.SPNY) excelled. Crude oil prices sent them up 1.22 percent to six-month highs.
Penn Entertainment (PENN.O) shares rose 9.1% at market peak. ESPN’s $2 billion sports betting contract enabled this growth.Walt Disney’s shares slid 0.7%, erasing earlier gains, as curiosity about its quarterly earnings peaked. LYFT.O plummeted 10% in a tumultuous market. The ride-hailing startup promised to undercut Uber (UBER.N).
A crucial point emerges after this intense market time. Refinitiv said on Tuesday that 78.6% of the 443 S&P 500 companies that reported beat expectations. Jason Krupa again addressed this complex market dance: “It could be a little bit that (the market is) digesting the fact that we’re beating earnings expectations, but those expectations have been going down from quarter to quarter.”
11.06 billion U.S. shares traded at market close. This exceeds the 20-session average of 10.89 billion shares. 1.18 times more NYSE equities went down than up. Nasdaq fell more than 1.63-to-1. The S&P 500 had 16 highs and seven lows in 52 weeks. The Nasdaq Composite saw 178 new lows and 60 new highs.
Our Reader’s Queries
What happens when inflation is anticipated?
Anticipated inflation, which refers to inflation that is expected, has a lesser impact on the redistribution of income and wealth. This is because people tend to take measures to safeguard themselves from the consequences of inflation when they anticipate it.
What is the meaning of anticipated inflation?
Anticipated inflation refers to the expected percentage increase in prices over a certain period of time, as predicted by those involved in an economy. For instance, consider a common consumer item like a loaf of bread. It’s safe to assume that the price of this staple will gradually rise over time.
What if inflation is completely anticipated?
Anticipating inflation allows for transactions to be made with future price changes in mind. This ensures that the levels of output, employment, and goods and services produced are not impacted by the inflation rate. By taking this approach, businesses can effectively plan for the future and avoid any negative consequences of inflation.
What caused the great inflation of the 1960s?
During the 1960s, the US dollar was connected to gold through the Bretton Woods agreement, but this connection was fragile. The Great Inflation narrative is partly about the breakdown of this system and the US dollar’s detachment from its final tie to gold.