U.S. stocks fell to start the week as investors braced themselves for fresh inflation data to be released mid-week.
Tech stocks were hit hard Monday as the Nasdaq fell 263 points, while the Dow and S&P 500 dropped 164 and 45, respectively. In Canada, the TSX declined 206 points as falling commodity prices weighed on the index.
It was another down day for the TSX on Tuesday, as Canada’s main stock index fell to its lowest level in 16 months, with crude prices plunging more than 7%. Recession fears escalated further as the U.S. yield curve inverted the most since March 2010. By Tuesday’s close, all four North American indexes were in negative territory.
The Bank of Canada surprised investors and analysts alike when it increased its benchmark interest rate by 100 basis points on Wednesday, the most aggressive rate hike since 1998. Wednesday’s move was the fourth consecutive interest rate increase since March, raising the overall policy rate to 2.5%.
In related news, headline U.S. consumer inflation rose 9.1% in June, year over year, the fastest pace since November 1981. On a month-to-month basis, core prices rose 0.7% in June, a sign of widespread inflationary pressures. The latest Consumer Price Index (CPI) data could force the Fed to move aggressively at its July policy meeting.
Although North American equity markets turned sharply lower after the release of the CPI data, all four major indexes pared losses throughout the day to close slightly in the red. The Nasdaq and the SPX were finished essentially flat, while the Dow, and TSX recorded minor losses.
U.S. stock indexes fell sharply after Thursday’s open but rallied throughout the day to close mixed. By Thursday’s close, the S&P 500 declined 11 points, the Dow dropped 142 and the Nasdaq finished flat. In Canada, the TSX fell 286 points, weighed down by commodity weakness and fears that the Bank of Canada’s 100-basis-point rate hike will negatively impact mortgage growth at financial institutions.
Losses Continue to Mount for North American Indexes
For the four trading days covered in this report, the Dow lost 708 points to close at 30,630, the S&P 500 dropped 109 points to settle at 3,790, while the tech-heavy Nasdaq fell 384 points to close at 11,251. In Canada, the TSX lost 694 points to end at 18,329.
source https://richarddri.ca/bank-of-canada-raises-key-rate-1-u-s-inflation-hits-9-1-in-june/
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