Wall Street did not move after the nightmare Thursday, which saw the S&P 500 lose 2.1% to 3,640.47, capitulating to the new low of 2022; the Dow Jones fell more than 458 points, up 1.54%, to 29,225.61, and the Nasdaq Composite slipped 2.84% to 10,737.51.
At about 4 pm Italian time, the Dow Jones lost 0.18%; the S&P 500 fluctuates just above par, while the Nasdaq is up 0.25%.
The desire for recovery of the US stock exchange has been crippled by the publication of the Fed’s preferred inflation index, currently led by Jerome Powell, to carefully monitor its monetary policy decisions, therefore to make any decisions on US interest rates .
This is the core PCE index which, on a monthly basis, rose by 0.6% in August, more than the + 0.5% expected, significantly accelerating the pace compared to + 0.1% in July. Year-on-year, the core PCE jumped 4.9%, more than the estimated + 4.7%, compared to the 4.6% rise the previous month.
The headline PCE index, on the other hand, slowed down, growing in August at an annual rate of 6.2%, less than + 6.4% in July. On a monthly basis, however, the PCE index has flared up, reporting a trend of + 0.3%, compared to the previous decline of 0.1%.
US stock indices worsened immediately after the release of the data which reignited fears of new rate hikes of at least 75 basis points by the Federal Reserve.
Last week, Jerome Powell’s Fed made its third consecutive monetary tightening of 75 basis points, taking US fed funds rates to a record since 2008, in the range of 3% to 3.25%, in order to to defuse runaway inflation.
However, Treasury yields retrace from the record values tested in recent sessions, despite the new further flare-up of inflationary pressures.
US 10-year Treasury rates drop to 3.71%, after having skyrocketed to over 4% during the week, to 4.019% for the first time since 2008, so in 14 years, and then dropped in one session. stronger from 2020.
The sharp turnaround was triggered by the Bank of England’s decision to postpone the start of the UK government bond disposals it had planned for next week by buying long-term Gilts on a temporary basis in order to counter the market chaos: chaos that has been caused by the decision of the government of Liz Truss to launch a maxi fiscal bazooka of tax cuts that economists and strategists do not consider sustainable.
The two-year Treasury rates also fell, dropping to 4.145% today, after flying up to 4.351% during the week that is about to end, the highest value since August 2007.
The main US equity indices are about to close a decidedly negative week and month: on a weekly basis, the S&P 500 lost 1.4%, while the Dow and Nasdaq both lost 1.2%. US stocks in deep red in the entire month of September: the S&P 500 capitulated by 7.9% and the Dow Jones suffered a fall of 7.2%. Worse the Nasdaq, which is preparing to close the month with a collapse of 9.1%.
Among Apple stocks, recovering from a thud in the eve of the session, equal to -4.91% at an altitude of $ 142.48, which brought it to a lows of almost 3 months, worsening the balance of 2022 to almost -22% . It impacted Bank of America’s decision to cut the stock recommendation from buy to neutral by citing weakening consumer demand and disappointing response to the new iPhone 14. BofA’s target price jumped from USD 185 to USD 160 for action. The stock remains under pressure, limiting the damage to a downside of around 0.30%.