Bearish Wall Street sentiment ahead of June CPI report

NEW YORK, July 13 (Bernama) -- Wall Street tumbled on Tuesday, revisiting bear-market territory, as investors lightened their holdings of stocks ahead of the monthly release of the Consumer Price Index (CPI) report, which officials say was likely to show another elevated reading for June, reported Sputnik.

The S&P 500 index, representing the top 500 US stocks, closed lower by almost 2 per cent, declining for a third day in a row. For the year-to-date, the Wall Street benchmark was down 20 per cent while the S&P was also down 21 per cent from its January record high of 4,818. By general market definition, any asset or index that is down 20 per cent from its most recent peak is categorised as being in a bear market.

The Nasdaq Composite, which comprises marquee technology names such as Amazon, Apple, Netflix and Google, was the outlier of the three indices, also fell 1 per cent on the day. For the year, the tech barometer was down 28 per cent.

The Dow Jones Industrial Average, comprising stocks of 30 large US corporations, fell 0.6 per cent on the day. For the year, it was down 15 per cent.

US inflation has been persistently running at four-decade highs since late last year as the closely-watched CPI growing at an annualised rate of 8.6 per cent as of May. The June update, due on Wednesday, is expected to show an 8.8 per cent increase.

The Federal Reserve's tolerance for inflation is 2 per cent per year and the central bank has vowed to raise interest rates as much as necessary to achieve that.

“The June inflation report will be a scorcher and help cement market expectations that the Fed will deliver another massive rate hike at the Fed policy meeting at the end of the month,” Ed Moya, analyst at online trading platform OANDA, said.

Many economists said the Federal Reserve kept rates “too low for too long” and could push the United States into a recession in its fight to bring inflation under control quickly.

US GDP (Gross Domestic Product) declined 1.6 per cent in the first quarter and a negative second quarter GDP is all that is decided to send the US into a recession.

-- BERNAMA