The Dow Jones index, which includes shares of thirty major American companies, lost 3.94% on Tuesday and closed at 31,104.97 points. The broader S&P 500 index fell 4.32% to 3,932.69 points and the Nasdaq Composite Index, which includes many companies in the advanced technology sector, even dropped 5.16% to 11,633.57 points.
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The year-on-year growth rate of US consumer prices slowed to 8.3% in August from 8.5% in July. However, the year-on-year decline in the inflation rate was milder than expected by analysts, who estimated the August level at an average of 8.1%. Additionally, consumer prices rose 0.1% on a monthly basis, while analysts had expected a 0.1% decline.
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“The (inflation) data was stronger than expected,” Corpay analyst Karl Schamotta said, according to Reuters. He said it was almost certain that the Fed would raise its key interest rate by another 0.75 percentage points next week.
The year-on-year inflation rate in the United States slowed for the second consecutive time
Economic
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Tech companies, whose stocks are highly sensitive to interest rate movements, were largely responsible for Tuesday’s stock market drop. For example, the shares of the software company Microsoft weakened by 5.5%, the shares of the technology company Apple fell by almost 6%, and the shares of the online store Amazon fell by more than 7%.
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In the foreign exchange market, the US dollar strengthened on Tuesday on the prospect of a further significant rise in US interest rates. At around 22:00 CET, the euro was losing around 1.5% against the dollar and hovered around $ 0.9970. On Monday, the European single currency rose to a nearly one-month high of $ 1.0198.
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The Fed will announce its interest rate decision on Wednesday next week. At its previous meeting in July, the central bank raised the benchmark interest rate by 0.75 percentage points, bringing it to a range of between 2.25 and 2.50 percent.
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