NEW YORK (AP) — Wall Street futures tumbled sharply before Tuesday’s open after new data showed U.S. inflation had slowed modestly, but rate hikes kept costs under control. It may not be enough to deflect aggressive pressure by the Federal Reserve to try.
The Dow Jones Industrial Average climbed about 600 points and entered negative territory. His benchmark S&P 500 Index is down 0.4% for him, and Dow Jones Industrial futures are currently down 1.2%.
The tech-heavy Nasdaq Composite Index fell nearly 3%.
The Labor Department reported on Tuesday that US inflation slowed for the second month in a row in August due to sharp drops in gasoline and used car prices, but food prices soared.
“The Fed is already in a hawkish mood, and this data release doesn’t deter it,” said Paul Ashworth, chief U.S. economist at Capital Economics.
European markets also reversed course at noon after US inflation data was released, with London’s FTSE 100 and Frankfurt’s DAX both down 0.3% and Paris’ CAC 40 down 0.2%.
In Asia, the Shanghai Composite Index rose less than 0.1% to 3,263.79, while Tokyo’s Nikkei 225 rose 0.3% to 28,614.63. Hong Kong’s Hang Seng fell 0.2% to 19,326.86.
Seoul’s Kospi rose 2.7% to 2,449.54 while Sydney’s S&P-ASX 200 rose 0.7% to 7,009.70.
India’s Sensex was up 0.8% to 60,620.01. Southeast Asian markets rose while New Zealand fell.
The Federal Reserve has confirmed support for significant interest rate hikes and keeping borrowing costs high long enough to ensure inflation subsides.
Consumer prices rose 8.3% year-on-year in August, the government said on Tuesday. It was still harrowingly high from July’s 8.5% gain and June’s 40-year high of 9.1%. On a monthly basis, prices have risen 0.1% since he was flat in July.
Excluding the volatile food and energy categories, so-called core prices jumped 0.6% from July to August, higher than many economists had expected, indicating continued inflation.
Investors had hoped that lower inflationary pressures might prompt the Fed to cut. Earlier similar hopes were dashed when Chairman Jerome Powell said interest rates would remain high in August.
According to the survey, traders expect the Fed to hike rates for the fifth time this year, by 0.75 percentage points, three times the usual margin this month. After that, the US central bank is expected to keep rates on hold until the first half of 2023.
In energy markets, US benchmark crude fell 41 cents to $87.37 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 99 cents to $87.78 on Monday. Brent crude, the price benchmark for international oil trading, fell 50 cents to $93.50 a barrel in London. It rose $1.16 to $94 in the previous session.
The dollar rose to 144.19 from 142.73 on Monday. The euro fell from he $1.0117 to he $1.0052.
The S&P 500 Index rose 1.1% on Monday. The Dow was up 0.7% and the Nasdaq Composite was up 1.3%.
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