#StockMarket #InflationData #PresidentialDebate
Market Mayhem: Stocks Slide as Inflation Data and Debate Impact Sentiment
Today, the U.S. stock market experienced a significant decline as investors digested the latest inflation data and the initial presidential debate between Donald Trump and Kamala Harris. The S&P 500 index fell by more than 1%, while the Nasdaq Composite dropped by approximately 0.8%. The Dow Jones Industrial Average saw a substantial decline of around 1.5%, translating to a loss of over 600 points, continuing the downward trend from the previous session.
Inflation Data: A Mixed Bag
The Consumer Price Index (CPI) report for August revealed a decrease in overall inflation to its lowest point in over three years. However, "core" inflation, which excludes food and energy costs, rose by 0.3% compared to the previous month, surpassing economists' forecasts of a 0.2% increase. This mixed result has led traders to lean towards a smaller interest rate reduction from the Federal Reserve next week.
Federal Reserve Expectations
Following the inflation data, the probability of the Fed enacting a 50 basis point cut has dropped to just 15%, down from a previous estimate of 44% a week ago, according to the CME FedWatch Tool. Traders are now anticipating an 85% likelihood of a quarter-point reduction this month, along with an increased chance of another quarter-point cut during the November meeting.
Debate Impact
The presidential debate between Trump and Harris lacked substantial detail on key economic topics, including tariffs, taxation, and regulation. However, the market perceived Harris as the winner, leading to a decline in stocks linked to cryptocurrency and a drop in Bitcoin (BTC-USD) due to Trump's favorable stance towards crypto.
Sector Performance
Interest-sensitive sectors were among the hardest hit as investors adjusted their expectations regarding the Federal Reserve's potential for a larger interest rate cut. Financial stocks (XLF) fell by more than 2%, while Real Estate (XLRE) dropped by over 1.7%. Shares of GameStop (GME) plunged by more than 16% after the video game retailer reported lower-than-expected quarterly revenues and announced plans to issue 20 million new shares.
Oil Market
Oil prices saw an uptick on Wednesday, recovering some of the losses from the previous session, largely due to concerns over supply disruptions as Hurricane Francine intensified to a Category 1 storm. Brent crude rose by 1.7% to $70.34 per barrel, while WTI increased by 1.8% to $66.92 per barrel.
Dollar Weakness
The dollar is weakening following the presidential debate and ahead of the inflation data that could provide hints about the anticipated Federal Reserve interest rate cuts. A CNN survey revealed that 63% of viewers felt Kamala Harris emerged victorious in the debate against Donald Trump, whose proposed tariffs are likely to drive up inflation and strengthen the dollar.
Market Sentiment
CNN's Fear and Greed Index, which assesses seven indicators of market sentiment, shifted further into the 'fear' zone. The market's uncertainty regarding whether the Fed will opt for a 25 basis point or a 50 basis point rate cut on September 18 continues to weigh on investor sentiment.
Key Stocks
- $NVDA: Nvidia shares were mixed but little changed in premarket trading.
- $AAPL: Apple shares were mixed but little changed in premarket trading.
- $MSFT: Microsoft shares were mixed but little changed in premarket trading.
- $META: Meta Platforms shares were mixed but little changed in premarket trading.
- $GOOGL: Alphabet shares were mixed but little changed in premarket trading.
- $AMZN: Amazon shares were mixed but little changed in premarket trading.
- $JPM: JPMorgan Chase shares were slightly lower again Wednesday.
- $BAC: Bank of America shares were slightly lower again Wednesday.
- $GS: Goldman Sachs shares were slightly lower again Wednesday.
- $GME: GameStop shares were down 11% after the company reported earnings late Tuesday.
- $DJT: Trump Media shares were down 10% after last night's presidential debate between Donald Trump and Kamala Harris.
Conclusion
Today's market performance was marked by a decline in stock prices as investors processed the mixed inflation data and the presidential debate. The shift in expectations regarding the Federal Reserve's interest rate cuts and the ongoing uncertainty in the market have led to a 'fear' dominated sentiment. As the market continues to navigate these factors, investors will be closely watching for any signs of clarity on the economic front.
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