North American markets tumble, with U.S. stocks posting worst drop since June 2020

North American markets slumped on Tuesday after the latest US inflation reading disappointed traders, with Canada’s main stock index falling more than 300 points and all three major US stock indices falling more than 300 points. USA suffering its worst day since June 2020.

SP/TSX The composite index fell 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 US stock indices.

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Bond prices also fell sharply, lifting their yields, after the latest US Consumer Price Index report showed inflation slowed to only 8.3 percent in August, instead of 8. .1 percent economists expected.

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As a result, the odds are increasing that the US Federal Reserve will raise its key interest rate next week by a full percentage point, but three-quarters of a percentage point remains the most likely outcome, said Sid, chief executive of CIBC Institutional Equity Research. Mokhtari said.

But if the central bank rises a full percentage point next week, markets could turn shaky.

“That’s quite a surprise, to be fair to you. And I think that’s where we go back to the (market) lows that we had in the summer,” she said.

“If there is a shock to the market to the downside due to the magnitude of a rate increase, it will probably be done by the group of larger-cap stocks that did not correct in the same way that the rest of the market did in the summer. . And those were the largest-cap technology names in the US that had the S&P 500.”

However, that could be the next best buying opportunity, according to Mokhtari.

Mokhtari anticipates that the markets will be range bound for the next time.

“It’s very important to approach this with a bar strategy, with earnings on one side of the ledger, and then look for risk-reward opportunities within higher growth areas, or areas that may be emerging, assuming there’s a bottom in the market.” market, which I believe, can begin to develop as we get through the month of September,” he said.

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

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S&P/TSX composite closes higher along with US markets despite falling oil prices

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

The October crude contract was down 47 cents at $87.31 a barrel and the October natural gas contract was up 3½ cents at $8.28 per mmBTU.

The December gold contract fell US$23.20 to US$1,717.40 an ounce and the December copper contract fell 5.5 cents to US$3.56 a pound.

The Canadian dollar traded at 76.28 US cents compared to 77.04 US cents on Monday.

© 2022 The Canadian Press

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