Stock market: Wall Street ends down, scalded by inflation

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MARKET OVERVIEW. The New York Stock Exchange closed lower on Wednesday after being hurt by accelerating inflation in the United States, but eventually cut losses by coming to terms with the idea that the US Federal Reserve (Fed) was poised to be even more aggressive will.

Affected by the decline in the battery metals index, the Toronto Stock Exchange’s flagship index ended the day down more than 60 points.

Consult market news (again).

Stock market indices at close of trading

In Toronto, the S&P/TSX closed 63.45 points (-0.34%) at 18,615.19 points.

In New York, the S&P500 fell 17.02 points (-0.45%) to 3,801.78 points.

the Nasdaq ended up 17.15 points (-0.15%) at 11,247.58 points.

the DOW ended up 208.54 points (-0.67%) at 30,772.79 points.

the loons rose by US$0.0028 (+0.3631%) to US$0.7710.

the oil ended at $0.60 (+0.63%) at $96.44.

L’gold rose $8.20 (+0.48%) to $1,733.00.

the Bitcoin closed at $226.27 (+1.16%) at $19,659.62.

the context

“Inflation has now taken hold and that is what worries investors and central bankers most,” said Jeffrey Roach of LPL Financial.

The character “is ugly, it doesn’t squirm,” commented Conerstone Wealth’s Cliff Hodge. “The Fed has no choice and needs to be more aggressive, increasing the likelihood of a recession next year.”

As the meeting progressed, the scenario of a one-point rate hike at the next Fed Monetary Committee meeting in late July began to emerge, in what would be a first since the 1980s.

Operators now estimate the probability of such an increase at 77%, while a week ago they thought it was zero.

However, this hypothesis of a Fed flexing its muscles like it hasn’t seen in more than 30 years hasn’t caused Wall Street to back out.

“Right now the market is demanding that the Fed act as quickly and as strongly as possible,” deciphered Gregori Volokhine of Meeschaert Financial Services.

“If the inflation numbers are very high while the economy continues to do well, the Fed will be aggressive and pretty quick, we’ll turn that page of rate hikes,” he continued. That’s why the market doesn’t collapse.

“Right now,” he says, “the only risk to the economy is inflation. That it breaks consumption by cutting purchasing power.

So while the idea of ​​an even steeper monetary policy stance is theoretically very unfavorable for tech and growth stocks, some of them went green during the session.

Amazon (AMZN, +1.08%), You are here (TSLA, +1.70%) or Qualcomm (QCOM, +2.02%) all ended significantly higher.

Another surprise, after initially skyrocketing following the release of the CPI index, bond rates returned. The US 10-year bond yield fell to 2.92% from 2.96% the previous day.

The 2-year rate, on the other hand, rose to 3.13% from 3.04%, a sign that the market expects slower long-term growth than the medium-term, hinting at a possible recession.

Immediately after the release of the CPI, the dollar rose above the euro for the first time since 2002, trading at $0.9998 to the euro.

On Wednesday, Wall Street delivered an unlikely cocktail that saw many tech stocks rise, in line with several so-called defensive stocks, ie less vulnerable to the economy, such as China PepsiCo (PEP, +0.35%), Kraft-Heinz (KHC, +0.98%) or note (MRK, +0.18%).

The action Twitter started (TWTR, +7.90% to $36.75) after the hedge fund (hedge fund) Hindenburg Research has announced that it has taken a stake in the social network, believing the platform has a “solid case” to prevail against Elon Musk in court.

The company managed to make a profit in the second quarter Delta Airlines performed less well than expected, earning it a market sanction (DAL, -4.47% to $29.70).

The airline took the entire sector with itAmerican Airlines (AAL, -3.11%) at United Airlines (ALU, -0.84%).

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