NEW YORK: Wall Street stocks declined yesterday (July 13) after the latest report showing surging inflation added to recession fears, intensifying debate on next steps by the Federal Reserve (Fed) to tame prices.
US inflation surged to a fresh peak of 9.1% in June, driven in part by significant increases in petrol prices.
Beyond the hit to consumption from high prices, analysts worry the report will prompt the Fed to adopt even tougher measures to tighten monetary policy, such as a full percentage point interest rate increase at the July 27 meeting.
Yesterday, Canada’s central bank took that step, raising its lending rate to 2.5%.
The Dow Jones Industrial Average dropped 0.7% to 30.772.79.
The broad-based S&P 500 fell 0.5% to 3,801.78, while the tech-rich Nasdaq Composite Index slipped 0.2% to 11,247.58.
Oanda’s Edward Moya said that he still expects the Fed to increase 75 basis points in July, “but a strong case could be made for a full-point increase”, according to a note yesterday.
“Wall Street isn’t expecting a severe recession, so downward pressure on stocks might be limited to another 5-10%,” he added.
Among individual companies, Delta Air Lines fell 4.6% after reporting lower-than-expected earnings, as spiking fuel prices and higher labour costs offset some of the gains from strong consumer demand for flying.
Twitter jumped 7.9% after investment fund Hindenburg Research revealed it had taken a stake in the firm based on its case against Elon Musk for moving to back out of his US$44 billion buyout bid.
Netflix rose 1.2% after announcing it had partnered with Microsoft on its new ad-supported streaming offering, though the streaming giant said the idea is still in its “very early days”.
Microsoft dipped 0.4%. – AFP
Source: The Sun Daily
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