The stock market reacts to the biggest jump in the US producer price index since 2010
Data on price increases for US manufacturers in November confirmed the problem of rising inflation. Stock indexes fell for the second day in a row this week ahead of the Fed meeting. Economists give their forecasts for the coming months.
Data on price increases for US manufacturers in November confirmed the problem of rising inflation. Stock indexes fell for the second day in a row this week ahead of the Fed meeting. Economists give their forecasts for the coming months.
That report follows the publication on Friday of consumer price index data for November, which showed an increase to a record pace over the past 39 years.
Analysts say the reasons for the record inflation are the rise in energy prices in November, even taking into account the decline in prices for crude oil, transportation and storage services, as well as industrial chemicals, ferrous scrap and food.
Against the background of rising demand in the run-up to the Christmas holidays, problems in supply chains persisted in November, remaining one of the key factors of inflation. At the same time, the provision of some services is hindered by a shortage of workers, which leads to an increase in prices.
The main stock indexes continued to decline for the second day in a row this week - on Tuesday, the Dow Jones, S&P 500 and Nasdaq Composite fell by 0.3%, 0.75% and 1.14%, respectively.
Read more about investors' concerns about the consequences of the Fed's decision following the meetings that will begin today and continue tomorrow, Marketinfo.pro I wrote in the article “Investors should be ready for this before the Fed meeting."
The market on Tuesday was also affected by the statement of the World Health Organization (WHO) that the new strain of Covid-19 Omicron is spreading faster than any previous strain, and is probably already present in most countries of the world even if it has not yet been detected.
Will Compernollet, senior economist at FHN Financial predicts that "in the next few months, the pressure in the supply chain should decrease as holiday shopping subsides, and manufacturers will have more time to adjust production capacity, but the impact on producer prices, and then on consumer prices will not be immediate," i.e. the pace of price growth in the coming months compared to last year's figures will still remain high.