PARIS, Oct 13 (Reuters) – The New York Stock Exchange opened sharply lower on Thursday in reaction to the publication of monthly consumer prices in the United States, which showed an acceleration in inflation higher than expected, which makes fear of another sharp rise in interest rates.
In early trading, the Dow Jones index lost 483.78 points, or 1.66%, to 28,727.07 points and the broader Standard & Poor’s 500 fell 2.18% to 3,499.04 points.
The Nasdaq Composite lost 3.02%, or 314.54 points, to 10,102.55.
An hour before the opening of Wall Street, whose futures contracts in the morning suggested a rebound, the United States Department of Labor indicated that the CPI index of consumer prices had accelerated to 0.4% in September and to 8.2% over one year, while the “core CPI”, which measures core inflation, came out with a monthly gain of 0.6% and 6.6% on an annual basis.
Economists polled by Reuters on average forecast an increase for the CPI of 0.2% and 8.1% and for the core CPI of 0.5% and 6.5% respectively.
On the bond market, the ten-year Treasury yield rose 16 points to 4.06%, to a new high since 2008, and the two-year yield rose 22.5 points to 4.50%, traders expecting overwhelmingly on a fourth consecutive 75 basis point rate hike by the US Federal Reserve (Fed) on 2 November. A small minority (10%) even anticipates an increase of 100 basis points.
Since March, the fed funds rate target has moved from around zero percent to 3.00%-3.25%.
Technology groups, sensitive to changes in the cost of credit, are neglected: Meta Platforms, Alphabet, Nvidia and Tesla yield from 2.65% to 5.55%.
In corporate earnings, Applied Materials fell 5.82% after a warning about the impact of new US export restrictions to China.
The world’s number one asset management company, Blackrock, fell 4.27%, penalized by the fall in its profit in the third quarter.
Delta Air Lines dropped 1.71% as the airline’s quarterly baby profit came in below expectations. Walgreens Boots Alliance, up 4.91%, is on the contrary driven by its quarterly results.