Wall Street’s main indexes fell on Wednesday as a surge in U.S. consumer prices last month deepened fears that high inflation is here to stay amid supply chain disruptions.
The Labor Department’s report also showed that in the 12 months through October the consumer price index increased 6.2%, the largest year-on-year advance since November 1990.
“Even though the Federal Reserve believes that inflation is transitory, the evidence is starting to add up that that’s not true,” said Rick Meckler, partner at Cherry Lane Investments In New Vernon, New Jersey. “The Fed has made very few moves outside of what they’ve told the markets they plan to do, but I think even they’ve got to be a little concerned by the strength of the increase.”
The report comes a day after producer prices data showed a solid rise in October and highlights the extent to which manufacturers were passing on higher costs to consumers, whose spending accounts for 70% of the U.S. economy.
The CBOE Market Volatility index a gauge for investor anxiety, shot up to its highest level in nearly one month earlier in the session.
Six of the 11 major S&P 500 sectors fell in early afternoon trading, with technology stocks pulled lower by a 1% decline in mega-cap companies Apple Inc and Microsoft Corp.
MacDailyNews Take: Once again, a healthy U.S. economy, consumer confidence, and consumer spending are essential to Apple, as America is Apple’s largest market, by far.
‘Tis best to get a handle on inflation, if you know how, while you still can. – MacDailyNews, May 11, 2021
Inflation is repudiation. — Calvin Coolidge
When a business or an individual spends more than it makes, it goes bankrupt. When government does it, it sends you the bill. And when government does it for 40 years, the bill comes in two ways: higher taxes and inflation. Make no mistake about it, inflation is a tax and not by accident. — Ronald Reagan
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