As inflation data raises doubts about the Fed’s next move, US equities give up early gains and close lower.

Spotlight:

  • Stocks in the United States have lost some of their recent gains. Even after crucial inflation statistics indicated that prices grew less than predicted in August, the stock market gained on Tuesday.
  • Last month, the Consumer Pricing Index increased by 0.3 percent, showing a decrease in price pressure from July’s 0.5 percent increase.
  • Both RBC and Morgan Stanley’s top equity strategists are predicting a stock market drop.

Stocks in the United States have lost some of their recent gains. Even after crucial inflation statistics indicated that prices grew less than predicted in August, the stock market gained on Tuesday. The S&P 500 finished in the red, with Apple down 1.37 percent. The Dow Jones Industrial Average has dropped over 300 points.


Last month, the Consumer Price Index, a widely used indicator of price increases across the country, increased by 0.3 percent. Economists had predicted a 0.4 percent growth, indicating a deceleration from the 0.5 percent increase in July.


While the evidence suggests a return of runaway inflation is unlikely, Rick Rieder, BlackRock’s global fixed income CIO, believes there is a danger of inflation running a little too hot for too long. He attributed the drop in consumer mood in the United States to supply shocks and fast price rises in home items and housing.
“The Fed should outline a tapering programme,” Rieder said, “as we appear to already be close to maximum employment and simultaneously may be running the risk of overheating on inflation,”

Both RBC and Morgan Stanley’s top equity strategists are predicting a stock market drop. According to Lori Calvasina of RBC, values are becoming stretched, and the S&P 500 might fall by 10% by the end of the year.

Over half of the firms in the benchmark index have suffered drawdowns of more than 10% since the spring, according to Morgan Stanley’s Mike Wilson, a situation that might be hazardous in the future. He also expects a 10% correction by the end of the year.

China’s efforts to limit cryptocurrency mining and trade have spread to the northern province of Hebei, where a regulator has said that it will be part of a larger crackdown. Crypto mining, according to the region’s internet authority, consumes a massive amount of energy, which contradicts China’s goal to achieve carbon neutrality by 2060.