Yesterday, US stock indices closed sharply lower following the release of inflation data in the United States. The inflation rate climbed by 4.2% in April, the highest level since 2008. Stocks on Wall Street dropped for the third consecutive day. The Dow Jones Industrial Average slid by 2%, the Nasdaq Composite was down by 2.7%, and S&P 500 lost 2.15%. The US dollar gained in value.
Given the inflation data, experts believe that the Fed will raise the interest rate no later than the end of 2022.
Yesterday, some sources reported on a 0.8% increase in inflation in April, others announced a 4.2% rise. Both figures are correct. The fact is that the first value is a seasonally adjusted figure, and the second one is inflation without adjustments.
In the early trade, Asian shares also slipped after a dismaying rise in US inflation bludgeoned Wall Street. Japanese stocks fell by 2.5%, and Chinese stocks lost 1.2%.
Oil prices dropped by 1.3% in the early session.
As for the epidemiological situation in the world, the third wave of coronavirus has slightly retreated from its highs, but COVID-19 is still spreading. Yesterday, new global coronavirus cases topped 750,000. India reached the devastating figures of 360,000 new cases and 4,100 deaths. Brazil's death toll increased to 2,500 per day.
Yesterday, France reported an increase to 21,000 coronavirus cases, Germany - 13,000, and Russia - 8,000.
Market participants are mulling over new weekly data on US employment.
S&P 500:4,060. Trading range: 4020 - 4100.
USDX: 90.66.The US dollar's sharp rally formed a strong bottom for the US dollar index at 89.90. Trading range: 90.20 - 91.00
USD/CAD: 1.2130. The US dollar has strengthened modestly against the Canadian dollar. It is obvious that the loonie has every chance to resume its bullish run. The Canadian dollar will most likely rebound strongly if oil prices fall at an accelerated pace. Trading range: 1.2080 - 1.2180
Conclusion: The US market is likely to rebound upwards. Apparently, this decline in the market is just a correction, and it is time for stocks to recover.