US Stocks listed on stock exchanges in the United States of America suffered huge losses on Tuesday as the consumer price index rose by 0.1% in August. Analysts and traders of US Stocks were not expecting an increase in the consumer price index as everyone believed decreasing oil prices will bring down CPI in the US economy.
Following the Russian invasion of Ukraine, Oil prices in the international market surpassed the mark of 120 dollars per barrel. The sudden increase in oil prices was caused due to western sanctioning of Russian oil and gas which was coupled with the post-pandemic imbalance in demand and supply for oil. The oil prices started cooling off after a few weeks as countries started to find a balance between demand and supply of oil.
As the consumer price index soared by 0.1%, smashing market expectations, The Dow Jones Industrial Average DJIA, fell about 1,276 points, or 3.9%, ending near 31,104. The S&P 500 index SPX shed 4.3% and the Nasdaq Composite Index COMP, tumbled 5.2%. Losses suffered by three major indices of US Stocks on Tuesday have been the worst daily performance since June 11, 2022.
A poll conducted by Reuters News Agency had predicted a decrease in the consumer price index by 0.1%. Such predictions of a decrease in CPI were taken seriously by the markets and analysts as everyone expected decreasing oil prices will decrease the prices of consumer goods. The year-over-year rate of the consumer price index slowed to 8.3% from 8.5% in July.
But the data released by the labour department and other statistics suggest that the gains from the decline in oil prices were offset by the increasing cost of rent and food.
The cost of purchasing food and accommodation has been steadily rising in the United States of America.
Eggs, which are a very important part of the average American meal saw their prices increase by nearly 40% over the last year. Prices of Butter, Coffee, Soup, and Hot dogs increased by 25%, 19%, 19% and 18% respectively.
A few days ago, US stocks and indices suffered huge losses following the speech of US Federal Reserve chief Jerome Powell at the Jackson Hole Symposium.
During his speech at a historic annual event which is participated by economists around the globe, Mr Powell stated that US Federal Reserve would continue taking aggressive steps to tame inflation in the US Economy.
The intentions of the US Federal Reserve regarding interest rate hikes went against market expectations which forced investors and traders to ditch US Stocks. Multi billionaires such as Tesla CEO Elon Musk and Amazon head Jeff Bezos lost millions of dollars at the end of the trading day.
