Biggest plunge of the year on Wall Street, panicked by inflation – 20 Minutes

It is the worst day on the American markets since June 2020. The New York Stock Exchange ended sharply lower on Tuesday, in a market devastated by a higher than expected American inflation indicator, which showered the optimism of the last days and portends an even more drastic rise in rates than expected. The Dow Jones fell 3.94%, the Nasdaq index fell 5.16%, and the broader S&P 500 index fell 4.32%. “It was a crazy day,” commented Greg Bassuk of AXS Investments. prices in August, against a drop of 0.1% expected by economists. Over one year, inflation slowed to 8.3%, but less than the 8.0% anticipated by the market. monetary tightening cycle of the Fed” (US central bank). “The market sees inflation going in the wrong direction, which would force the Fed to maintain its offensive posture, or even to go even further,” observed Quincy Krosby of LPL Financial. Possible one-point rate hikeTraders are now going so far as to assign a 34% probability of a one-percentage-point hike in the Fed’s key rate at its next meeting on September 20-21, and no longer 0.75 point, a hypothesis that no one had considered until today. “The market is worried that the Fed will drag us into a recession or seize up the system by depriving it of liquidity,” noted Quincy Krosby. that inflation was entrenched in the US economy, especially food prices. “The problem is knowing how much these high prices will weigh on the real economy and consumers,” said Greg Bassuk, to the point of crushing demand, which will also be penalized by the tightening of credit conditions. and financing. Plunge in technology stocks The prospect of a more expensive credit market has torpedoed technology stocks, which most often have to borrow to finance their growth. The Nasdaq giants all suffered, in particular Apple (-5.87%), Amazon (-7.06%), Alphabet (-5.86%) or Meta (-9.37%), which fell to its lowest level since the first days of the coronavirus pandemic, in March 2020. All members of the Dow Jones ended down, with no sector managing to float. Among the few few to come out of it, Twitter (+0.80% to 41.74 dollars), hailed after the favorable vote, at an extraordinary general meeting, of shareholders in favor of the takeover by Elon Musk, which the entrepreneur has since denounced.