Thursday saw a turbulent day on the markets with stocks falling and the Dow dropping over 600 points. All of this is because Friday sees the release of a hugely important report into the inflation rates of the US economy, and the news isn’t expected to be good.
The consumer price index for May will reveal whether the skyrocketing inflation rates are getting worse or whether they have peaked. All of which will be pivotal in the Federal Reserve’s decision of whether to raise interest rates even further.
While the Dow Jones Industrial Average was badly hit with a fall of 638 points and a drop of 1.94%, the NASDAQ Composite fared even worse and saw its value sliding by 2.75%. It was a tough day for the S&P 500 too, dropping 2.38% of its value.
It was a particularly bad day for the big tech stocks. Meta Platforms saw its share value slipping by 6.4% and Amazon stock tumbled by 4.15%. Even Apple had a bad day on the market with its stock price falling by 3.6%. Further afield, Chinese technology stocks like Pinduoduo had a nightmare day that saw nearly 10% wiped off its share value.
Elsewhere it was a gloomy time for some of the biggest casino brands in the US with Las Vegas Sands losing 5.6% and Caesars Entertainment falling 3.8%. Other notable falls included Boeing that saw its share price drop by 4%.
The markets have been awash with rumors about what Friday’s consumer price index report will say. This is because the inflation rates have had a pivotal role in how the markets have operated for the past six months.
The widespread sense of fear made an obvious impact on the markets and the so-called ‘fear gauge’ rose up to 26 points for the first time in June. It’s feared that the US economy is still some way of being back to full health and that further interest rate hikes could get even more aggressive.
The inflationary pressures have largely come as a result of the soaring energy prices, as well as the ongoing supply chain problems. With the cost of US West Texas Intermediate crude still being over $120 per barrel, it has had a knock-on effect in many areas of the US economy.
This has been doubled up with figures showing that the nation’s recovery from the pandemic isn’t coming as fast as hoped. Last week saw the US jobless claims figures coming in 19,000 higher than initial estimates.
However, many analysts still believe that stocks will improve for the remainder of 2022. While May has been a turbulent month and this volatility is expected to last for much of the summer, hopes are that the economy should be able to sustain the inflationary pressures.
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