A more aggressive Fed, higher Treasury yields and a stronger dollar aren't a great recipe for stocks. That's especially so when markets were betting on the opposite
Dow Jones futures tilted higher overnight, along with S&P 500 futures and Nasdaq futures. The stock market rally plunged Tuesday on a hotter-than-expected inflation report, with the major indexes breaking below their 50-day moving averages and wiping out all or almost all of their recent gains.
The August consumer price index was much worse than expected. Consumer prices rose 0.1%, vs. views for a 0.1% drop, with food prices and rents pushing up costs despite plunging gasoline prices. The core CPI, which excludes food and energy, popped 0.6%, double what was expected. Headline inflation cooled somewhat again, to 8.3%, but Wall Street expected 8%. Core inflation rose more than forecast, to 6.3%.
That spurred one Wall Street firm to predict that the Federal Reserve will increase rates by a full percentage point at the Sept. 20-21 Fed meeting. That would be the most since the early 1980s, when then-Fed chief Paul Volcker waged all-out war on inflation.
Pure Storage (PSTG), Tesla rival Nio (NIO), Devon Energy (DVN), Wolfspeed (WOLF) and Enphase Energy (ENPH) showed relatively healthy action on Tuesday.
Megacaps Apple (AAPL) and Tesla (TSLA), which had flashed buy signals recently, fell hard on Tuesday, back below key levels. Nvidia (NVDA) and Facebook parent Meta Platforms (META), nobody's idea of current market leaders, plummeted to 2022 lows.
DVN stock is on IBD Leaderboard. PSTG stock is on SwingTrader and was Tuesday's IBD Stock Of The Day. Tesla stock and Devon Energy are on the IBD 50. Devon and ENPH stock are on the IBD Big Cap 20.
No comments:
Post a Comment