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US stock market report – Inflation spikes to 4.2%, Dow pares 600 point loss

The will it or won’t it question on inflation was confirmed this morning, as predicted in my regular Monday updates, with US CPI reaching 4.2% for the 12 months to the end of April.

The result was far higher than the 3.6% predicted, sending markets in a sharp sell-off with the Dow Jones down 600 points at one stage.

Ultimately, the losses weren’t as significant with the Dow closing 2.0% lower, the S&P 500 down 2.1% and the Nasdaq 2.7%.

It is an interesting event as the Federal Reserve has been predicting a short-term inflation spike for some time, confirming they had no intention to raise rates regardless of the result, yet traders continue to assume a rate hike will be inevitable.

Not unexpectedly, the comparison to prices before the pandemic saw everything from food, up 2.4%, and restaurant meals, up 3.8%, as well as used car prices, up 82%, moving higher.

Energy was the only sector to finish in positive territory, with consumer-facing businesses like Amazon (NASDAQ: AMZN) and PayPal (NASDAQ: PYPL) the hardest hit, down 2.2% and 3.5%, respectively.

US stock market movers

Here’s how other popular US stocks fared in the choppy session on Wednesday.

  • Intuit (NASDAQ: INTU) up 1.2%
  • Microsoft (NASDAQ: MSFT) down 2.9%
  • Tesla (NASDAQ: TSLA) down 4.4%
  • Workday (NASDAQ: WDAY) down 5.2%
  • MercadoLibre (NASDAQ: MELI) down 5.7%
  • Square (NASDAQ: SQ) down 6.3%
  • Affirm (NASDAQ: AFRM) down 10.2%
  • Virgin Galactic (NASDAQ: SPCE) down 11.3%

Back home on the ASX, the S&P/ASX 200 (ASX: XJO) is heading towards another negative open on Thursday. For all the latest, check out Rask Media’s ASX 200 morning report.

The Golden Rules of Investing

We might be experts in retirement, but with combined financial advice experience of 35+ years, we’ve nearly seen it all. 

In mid-2023, our senior team at Wattle Partners Financial Planning put the finishing touches on a brand-new report “The Golden Rules of Investing“.

In this free report, we outline the key principles that determine all of the portfolio construction and investment decisions of Wattle Partners. Collated over decades, this paper should be seen as a work-in-progress, constantly under review in light of the ever-evolving nature of markets. 

You’ll find the free report on my Author page. Simply click the button below to view the Golden Rules.

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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Wattle Partners is a financial advice firm, servicing clients around Australia, specialising in retirement planning (pre and post retirement). 

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