North American markets fall, with US stocks posting worst drop since June 2020 |

North American markets fall, with US stocks posting worst drop since June 2020 |

North American markets fell on Tuesday after the latest reading on U.S. inflation disappointed traders, with Canada’s main stock index falling more than 300 points and the three major U.S. stock indexes suffering their worst day since June 2020.

The S&P/TSX Composite Index lost 341.83 points to 19,645.40.

In New York, the Dow Jones industrial average fell 1,276.37 points to 31,104.97. The S&P 500 index fell 177.72 points to 3,932.69, while the Nasdaq composite fell 632.84 points to 11,633.57.

The sell-off ended a four-day winning streak for major U.S. stock indices.

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S&P/TSX Composite Index closes up nearly 1.9%, US markets also rise

Bond prices also fell sharply, pushing up their yields, after the latest US Consumer Price Index report showed inflation had slowed to just 8.3% in August, in August. instead of the 8.1% expected by economists.

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As a result, there is a growing chance that the US Federal Reserve will raise its key interest rate by one percentage point next week, but three-quarters of a percentage point continues to be the most likely outcome. , said Sid, managing director of institutional equity research at CIBC. said Mokhtari.

But if the central bank raises a percentage point next week, markets could get choppy.

“It’s a big surprise, to be honest with you. And I think that’s where we’re coming back to the (market) lows that we had in the summer,” he said.

“If there’s a downside shock to the market from this magnitude of a rate hike, it would likely be done by the larger-cap group of stocks that haven’t corrected in the same way that the rest of the market did in the summer. And it was the largest cap tech names in the US that held the S&P 500.”

However, this could turn out to be the next best buying opportunity, according to Mokhtari.

Mokhtari expects the markets to be rangebound over the next few moments.

“It’s very important to approach this with a barbell strategy, with utilities on one side of the ledger, and then look for risk-reward opportunities in growth areas or areas that may emerge, assuming there is a low building in the market, which I believe may start to develop as we move past September,” he said.

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He noted that September is historically the weakest month in terms of stock returns.

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S&P/TSX Composite Index closes higher with US markets despite lower oil prices

Another looming challenge for equities ahead of the US Federal Reserve’s decision day will be what is known in the financial world as Quadruple Witching Day, which takes place on Friday, September 16. On that day, stock index futures derivatives, stock index options, stock options, and single stock futures will expire simultaneously.

The October crude contract was down 47 cents at US$87.31 per barrel and the October natural gas contract was up 3.5 cents at US$8.28 per mmBTU.

The December gold contract was down US$23.20 at US$1,717.40 an ounce and the December copper contract was down five and a half cents at US$3.56 an ounce. book.

The Canadian dollar was trading at 76.28 cents US against 77.04 cents US on Monday.

© 2022 The Canadian Press

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