Here are five key things that could impact Wednesday’s trading.
$ 31T IN THE HOLE: US government debt continues to climb and will soon reach $ 31 trillion for the first time this month.
While several countries around the world accelerated their spending in response to COVID-19, congressional spending was already rising rapidly long before the pandemic triggered a wave of lending that exacerbated the rate.
America has the largest national debt in the world at $ 30.9 trillion. With a population of over 333 million, that means a debt burden of $ 92,709 per citizen and $ 245,191 per taxpayer and equates to a government debt / gross domestic product ratio of 97.53 percent, according to USdebtclock.org.
US NATIONAL DEBT will double GDP by 2051, INCREASING THE RISK OF TAX CRISIS: CBO
The site also tracks the debt of other nations, so FOX Business decided to do some comparisons to show how they stack up.
Japan has the highest public debt-to-GDP ratio of 288.31% and is second in line to the United States by total debt with a national debt of $ 15,231 trillion.
Inflation rose more-than-expected in August as rising cost of food and rents offset a sharp drop in gasoline prices.
HERE INFLATION HITS AMERICANS HARD HARD: The Department of Labor said Tuesday that the Consumer Price Index, a large measure of the price of everyday goods including gasoline, groceries and rents, rose 8.3% in August over one year. does. Prices have risen by 0.1% in the one-month period since July.
These figures were both higher than the main figure of 8.1% and the monthly decline of 0.1% predicted by Refinitiv economists, a worrying signal for the Federal Reserve seeking to cool price gains and tame consumer demand. with an aggressive campaign to raise interest rates. Shares tumbled on the surprisingly hot report, with the Dow Jones Industrial Average losing more than 1,000 points on Tuesday afternoon.
So-called core prices, which eliminate the more volatile measurements of food and energy, rose 6.3% from the previous year, above the 6.1% forecast by economists. Core prices also rose more-than-expected on a monthly basis, leaping 0.6% in August, a larger increase than in April, May, June and July and a worrying sign that underlying inflationary pressures in the economy remain strong.
AMERICAN INFLATION EXPECTATIONS LAUGH AGAIN IN AUGUST, NEW YORK FED SAYS
“The CPI report for August indicates that inflation is still hot,” said Jason Reed, assistant professor and finance professor at Mendoza College of Business at the University of Notre Dame. “Economists were hoping for a cooling in August and saw it with a significant drop in the price of gasoline and energy, but food and health care prices remained high.”
PUBLICATION OF THE ECONOMIC REPORT: Investors are gearing up for another key inflation report Wednesday morning, after Tuesday’s warmer-than-expected August CPI report rocked the markets.
At 8:30 am ET, the Bureau of Labor Statistics will report wholesale inflation for August.
The producer price index is expected to slide 0.1% on a monthly basis according to Refinitiv forecasts, after falling by half a percentage point in July.
Year-over-year, the prices paid by wholesalers are expected to increase by 8.8%. That would be a full percentage point lower than the peak of 9.8% in July and the fourth month in the last five months of annual growth down from a record increase of 11.7% in March (the final demand index goes back as of November 2010).
FORMER OBAMA OFFICER SAYS WE HAVE A “SERIOUS INFLATION PROBLEM”
Excluding food and energy costs, core producer prices are projected to rise 0.3% monthly in August, up slightly from the 0.2% increase in July.
Year-over-year for core PPI up 7.1% in August, the fifth consecutive month of slowing growth after a record 9.7% increase in March (data from April 2011).
Also Wednesday at 10:30 am ET, the Department of Energy Information Administration will release last week’s inventory report.
Crude oil inventories are expected to rise by 833,000 barrels, following a massive surprise surge of nearly 9 million barrels the previous week.
Watch for a build of 600,000 barrels in distillate supplies (heating oil, diesel fuel) and a draw of nearly 900,000 barrels in gasoline stocks.
MARKETS FALL: Equities suffered the worst day in more than two years after warmer-than-expected inflation data disappointed investors’ hopes that cooling price pressures would prompt the Federal Reserve to moderate its rate hike campaign of interest. Investors were selling everything from stocks and bonds to oil and gold.
All 30 stocks on the Dow Jones Industrial Average fell, as did all 11 sectors of the S&P 500. Only five stocks in the broad benchmark ended the session in green.
Meta Platforms, Facebook’s parent company, fell 9.4%, BlackRock fell 7.5%, and Boeing fell 7.2%.
|HALF||META PLATFORMS INC.||151.47||-1.66||-1.08%|
|BLK||BLACK ROCK INC.||643.79||-0.93||-0.14%|
|BA||THE BOEING CO.||149.29||+2.00||+ 1.36%|
The Dow fell 1276.37 points, or 3.9%, to 31104.97. The S&P 500 fell 177.72 points, or 4.3%, to 3932.69. The Nasdaq Composite slipped 632.84 points, or 5.2%, to 11633.57. All three indices recorded the steepest one-day losses since June 11, 2020.
The declines left industrialists Dow down 14% in 2022, while the S&P 500 lost 17% and the Nasdaq Composite lost 26%.
Investors had eagerly anticipated Tuesday’s release of the consumer price index, which provided a final look at inflation before the central bank’s interest rate setting committee met next week. Expectations for the monetary policy path have dominated markets as investors calculate higher rates in asset prices and try to predict how well the economy will hold up as rates rise.
“The likelihood of a recession increases if the Fed has to move more significantly to tackle inflation,” said Chris Shipley, chief investment strategist for North America at Northern Trust Asset Management.
Economists interviewed by the Wall Street Journal had expected consumer prices to rise by 8% annually in August. Analysts had hoped that officials would consider easing the pace of interest rate hikes if the data continued to show falling inflation.
The data undermined these hopes, appearing to solve the case for the Fed to raise rates by at least 0.75 percentage points next week.
ANNUAL MARKET DATA: The Dow Jones Industrial Average, which came out of its correction four weeks ago, closed today nearly 15.5% below the record high of January 4th.
The S&P 500, which fell into a bear market on June 13 for the first time since early 2020, is down 18% since its record close on January 3.
|Me: DJI||MEDIA DOW JONES||31135.09||+30.12||+ 0.10%|
|SP500||S&P 500||3946.01||+13.32||+ 0.34%|
|ME: COMP||COMPOSITE INDEX NASDAQ||11719.678088||+86.10||+ 0.74%|
The Nasdaq Composite, which entered a bull market four weeks ago and has since fallen into correction territory, closed 27.6% below its record close on November 19.
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The small-cap Russell 2000, which also exited the bear market four weeks ago, is 25% below its November 8 high.