Yesterday, the Dow Jones fell to 32,910.90, the S&P500 lost 1.08% closing at 4,115.77, and Nasdaq shed 0.73% finishing at 12,086.27. All three averages started the week positively, recording back-to-back gains on Monday and Tuesday.
The European markets didn’t fare much better ahead of today’s European Central Bank monetary policy meeting, which is expected to end in the ECB announcing its first interest rate hike in 11 years. STOXX was down 0.94%, while DAX40 slid by 0.99%.
Investors are feeling a little nervous and hesitant with inflation pressures mounting. As the Eurozone wrestles with record-high inflation, there is a feeling of certainty that the ECB’s decision later in the evening will be in favor of an interest rate hike. More importantly, the markets are eager to see how high it will be, and at what rate will it be implemented.
The CPI report, scheduled to be released this Friday, is expected to provide some clarity to the market. The US economy is riding on these reports, which will show whether inflation has peaked in the US. The Fed remains quiet ahead of the scheduled policy-setting meeting the following week when they are expected to roll out the next interest rate hike. But that decision will also be based on Friday’s CPI reading.
Global markets are all looking for conclusive readings on inflation before making any serious moves.
Consensus economists are forecasting headline inflation to rise at 8.2% for May, and core inflation by 5.9%. Headline inflation shows the inflation for prices of all goods across the board, while core inflation metrics exclude food and energy prices because they are considered the most volatile.
The Biggest Market Movers
Twitter stock rallied on new information saying that the social media platform was going to provide the requested information to Elon Musk, rebutting his theory about the platform being riddled with bots and fake accounts.
GameStop recorded a two-month high on Wednesday at $153 but closed at $139 by end of day. Intel recorded a loss of over 5% due to a weakening demand for semiconductors and Citigroup’s forecast of weaker-than-expected Q2 earnings.
Chinese stocks rallied on Wednesday with JD.com gaining nearly 8%, helping to offset Nasdaq’s losses elsewhere. Surprisingly, Etsy was one of the best-performing companies on the S&P 500 yesterday, adding 4% when it has lost about 61.3% year-to-date.
In the wake of the economic events today and tomorrow, US Stock Index futures recorded gains. Tesla climbed 3.5% in pre-market trading, while Microsoft and Apple recorded small gains as well. Traders should keep an eye out for the economic developments caused by the ECB’s decision, while keeping in mind that tomorrow’s CPI report is also bound to cause some movement.
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