For an individual for example, a $100 bill would be able to buy less on higher inflation. Inflation does reduce the purchasing power of money, which means consumer spending is more thinly spread around the economy. Central banks usually target a 2-3% annual inflation rate, a healthy level signalling that consumer demand is high enough for businesses to grow and expand, but not too high that wages and businesses can’t catch up. Generally, inflation is seen as a good thing as this means the economy is growing. Why is inflation bad for the economy and stock market? Despite Fed chairman Jerome Powell recently warning that higher rates are likely to persist for some time, the market was still hoping for some relief.
The market had previously been hoping that the lower oil price would feed through to a lower inflation rate, and signal an easing in the pace of rate hikes. A higher core CPI also means that it is no longer just energy costs rising, as rising energy costs had been a side effect of the Russian-Ukraine war. Core CPI excludes food and energy and reflects more persistent sources of inflation. Even more of a shock was the core CPI rate, which was 6.3% vs. This was slightly lower than July’s 8.5%, but higher than the 8.1% consensus forecast. CPI, commonly known as inflation, was 8.3% for this August (year-on-year). Sony Group ( NYSE:SONY ) hit $72 - lowest since July 2020.Lumen Technologies ( NYSE:LUMN ) hit $8.95 - lowest since Nov 2020.Nvidia ( NASDAQ:NVDA ) hit $130 - lowest since March 2021.Intel Corporation ( NASDAQ: INTC ) hit $30 - lowest since Feb 2016.Meta Platforms ( NASDAQ: META ) hit $150 - lowest since March 2020.Several notable companies even fell to new 52-week lows as risk appetite evaporated: S&P 500's worst days of the 2022 - Image Credit: CNBC The Dow fell nearly 4%, while the S&P 500 index fell 4.3%.
inflation data came in higher than expected. Last Tuesday, equity markets experienced their worst day of 2022 after U.S. may enter a recession sooner than anticipated, with economic growth slowing more than expected. inflation data came in higher than expected, giving investors a reality check. Sector 7D Performance - 16th September 2022 - Simply Wall St Some of the developments we have been watching over the week include: released GDP estimates for July, which showed a growth of 0.2% following a fall of 0.6% in June. The data showed extremely high numbers, aggregating into a 9.1% inflation rate in August (year-on-year) for the Euro area. Inflation data was also released for several European countries, including the U.K. inflation data causing global market sentiment to sour quickly. This week also saw the release of various economic data, with the highly-discussed U.S. Real estate and telecom suffered the biggest drops this week, while energy, consumer discretionary and healthcare outperformed the rest of the market. continued in the red for the third consecutive week. Market Insights for week ending 16th SeptemberĮquity markets in the U.S.