Wall Street falls sharply, panicked by stubborn inflation

Wall Street falls sharply, panicked by stubborn inflation
© Belga

The New York Stock Exchange ended sharply lower on Tuesday, in a market devastated by a higher-than-expected U.S. inflation indicator.

Inflation reached an annualised rate of 8.3% in August, the U.S. Bureau of Labor Statistics reported. This was lower than the 8.5% rate recorded in July, and June’s 9.1% inflation rate, but it was still much higher than most observers had expected.

This dampened the optimism of recent days and led to fears of even tougher monetary tightening than expected, causing markets to plunge.

The Dow Jones, the star index on Wall Street, ended the day with a loss of 3.94%, closing at 31,104.97 points, over 1,250 lower than on Monday evening.

The Nasdaq technology index lost 5.16% to end the day on 11,633.57 points, while the broad-based S&P 500 plunged 4.32% lower, closing at 3,932.69.

Tuesday was the worst session since 11 June 2020, according to the Bloomberg agency.

Heavy technology companies such as Amazon, Apple, Facebook Mother Meta and Microsoft were hit hard, with price drops of up to 9%. Tesla lost 4%. Google parent Alphabet was down nearly 6%.

Google is facing damages claims of up to €25 billion in two class-action lawsuits, expected to be officially filed next week. The two cases are being brought on behalf of publishers in the United Kingdom and the European Union who say they have been harmed by Google with its digital advertising practices.

Twitter managed to escape the negative mood, gaining 0.8%. Shareholders of the social media company voted at a shareholders' meeting on Tuesday for a takeover by Tesla CEO Elon Musk.

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