Better-than-feared Inflation Data Fails to Prevent Market Downfall, Dow Tanks 290 Points

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by Bhushan Akolkar · 3 min read
Better-than-feared Inflation Data Fails to Prevent Market Downfall, Dow Tanks 290 Points
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The US stock market remains under pressure despite better-than-feared inflation data. All stock indices are in the red.

The US released its inflation numbers on Tuesday, September 14, showing better-than-feared data. The consumer price index for the month of August showed a surge in inflation, however, it turned out to be lesser than expected.

The Dow Jones Industrial Average (INDEXDJX: .DJI) ended 0.84% down losing 290 points on Tuesday. This straight away wiped off all the gains from Monday. The Dow Jones ended Tuesday’s session at 34,577 levels.

Similarly, the S&P 500 (INDEXSP: .INX) also ended 0.53% down at 4443 levels. Stocks linked with the economic recovery remained under pressure. General Electric dragged the industrial sector downwards closing nearly 4% in the red. Also, Bank of America was down by 2.6% on Tuesday. 

Tech giant Apple Inc (NASDAQ: AAPL) unveiled its iPhone 13 in one of the most-awaited events of the year. However, the AAPL stock ended 1% in the negative. But this was very much in line with Apple’s historical behavior of the past.

But other tech players like Microsoft Corp (NASDAQ: MSFT) continued inching northwards gaining nearly 1%. As such, September has been a month of speaking about the recent inflation numbers, Liz Ann Sonders, Charles Schwab chief investment strategist told CNBC:

“What we need to see to be fundamentally markets supportive is a continued easing in the inflation piece without deterioration in the economic outlook. The next couple of weeks, economic data points become even more important to see whether it confirms the weakness that we saw on the August jobs report or starts to suggest that maybe we’re seeing an improvement”.

The September Woes Continue amid New Inflation Data Report

Historically, the month of September has been a month of volatility and subdued performance. As per data by CFRA, the markets have declined by 0.56% on average during this month.

So far, the Dow Jones is down 2.2% this month. On the other hand, the S&P 500 and the Nasdaq Composite are down by more than 1% in September. All eyes are now on the Federal Reserve which is conducting its two-day policy meeting starting September 21.

The central bank will be monitoring key economic indicators like inflation readings. Besides, the central bank is further deciding to taper the easy on the monetary policy. Art Hogan, chief market strategist at National Securities said:

“I believe the Fed will talk about tapering in September and not announce it until the November meeting and then put it in place before the end of the year”.

On the other hand, the House Democrats have recently proposed new tax hikes for the rich and organizations.

“I think the market is starting to come to grips with the idea there is going to be a tax hike and the next round of stimulus is actually a tightening of fiscal policy, not stimulus, not through the lens of an equity investor,”said  Barry Knapp, Ironsides Macroeconomics managing partner.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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