Today, the Bureau of Labor Statistics announced new CPI data. The annual increase in consumer prices was 6.4%, more than the rate expected by economists. And Core CPI which doesn't take into account volatile energy and food components rose 5.6%, also above expectations.
As highlighted in yesterday's article, a higher level of inflation indicates more inflationary pressure on the economy, and this means that the Federal Reserve might need to increase the interest rates more than expected. This leads investors to predict a lower rate of growth and lower economic activity, which causes lower earnings for the majority of firms.
This was one of the factors that led the S&P, Dow, and Nasdaq to open 0.7, 0.6, and 0.8% lower.
Comments