After reports reported that US wholesale prices rose at record paces last month, US stocks fell, further increasing pressure to end the Federal Reserve’s bond purchase program sooner.
Wall Street’s Benchmark S & P 500 fell 0.7% in early New York trading, while the technology-focused Nasdaq Composite fell 1.1%.
US producer prices in November rose 9.6% year-on-year, the largest increase in 2010 records, up sharply from 8.8% last month. Economists surveyed by Reuters expected prices to rise 9.2% in November.
After the US Open, markets across the Atlantic also fell, the STOXX 600 index across Europe fell 0.5%, and Frankfurt’s Dax fell 0.6%. The FTSE 100 in London hasn’t changed much.
Investors are waiting for announcements from three central banks this week on how to balance rapid inflation with the epidemic of the Omicron coronavirus variant.
The Federal Reserve may announce on Wednesday that it will delay its bond purchase program faster than it did at the meeting. last monthSaid the economist. It will set the stage for rate hikes from historic lows around mid-next year.
Stephen Englishman of Standard Chartered Bank of New York said, “The possible consequences of the Federal Open Market Committee meeting on December 15 are from a gradual tapering acceleration to a sharp acceleration that reflects sharp inflation concerns. It shows that the pace of rate hikes is fast. ”
“Our client discussions suggest that market participants see a significant risk of sharp taper acceleration.”
In the UK, investors are betting that the rapid spread of Omicron variants has reduced the likelihood that the Bank of England will tighten monetary policy at its Thursday meeting.
European Central BankWill also meet on the same day to announce the size of bond purchases through the asset purchase program after the new € 1.85 trillion pandemic emergency purchase program has been set to suspend net purchases since March. Inflation in the euro area rose to 4.9% in November, above the average forecast of 4.5% by economists surveyed by Reuters.
According to Invesco Emea fund manager Georgina Taylor, prices for everything from energy and housing to food are rising in each region, but the three central banks are facing subtly different pressures.
“When we returned to the financial crisis, it was all about [the banks] It’s been pretty tuned, “she said. “Now everyone is fighting their domestic dilemma and they are all doing their own thing.”
Covid poses a common threat. Eurozone countries have imposed limited coronavirus restrictions over the past week, and in the wake of a surge in the UK, Prime Minister Boris Johnson has given most indoor venues a duty to wear masks and guidance on working from home. I was forced to reintroduce it. The average daily case rate in the United States for the past seven days has risen to about 120,000, the highest level since late September.
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