S&P 500 chart.
The correction in the US market continues.
Stocks fell on Tuesday despite the positive inflation report for August. Dow lost 0.8%, while S&P 500 and Nasdaq declined by 0.6% and 0.5% respectively.
Following this, Asian markets also dropped this morning. China indices fell 1% and Japan indices slipped 0.5%.
But in terms of macro statistics, production in China reportedly increased 5.3% compared to August last year, and retail sales also rose 2.5%. Sadly, unemployment also increased to 5.1%.
On the bright side, the global oil market continued to increase, keeping Brent above $ 74 / bbl - $ 74.15. Apparently, US reserves fell by 5.4 million barrels over the week.
With regards to the coronavirus, there was another increase in the amount of new cases to 513,000. The US accounted for approximately 142,000, while the UK, Turkey and India accounted for 27,000 each. Most of the severe cases (and deaths) were unvaccinated people, so US President Joe Biden called for tougher restrictions to push citizens to vaccinate.
Going back to the markets, the S&P 500 valued 4.443 points, ranging from 4.440 to 4.470. This was surprising because US inflation reportedly decreased more than expected, while smoothed inflation increased by only 0.1%. Overall inflation remains high at 5.3%, while core inflation, which excludes food and gasoline prices, decreased slightly from 4.2% to 4%.
The benchmark index almost touched the 50 MA - 4.420. From there, large funds can start new purchases.
Another important news was the announcement of Amazon that it will continue to expand, taking advantage of the COVID epidemic in the United States and the growth of online commerce. The company said they will increase staff by 125,000 and raise the minimum wage to $ 18 per hour.
Talking about dollar, it remained at 92.60 points yesterday and ranged from 92.30 to 92.90. Clearly, the latest CPI data did not give the currency the direction that some had expected. It should remain there until the Fed meeting next week.
As for USD / CAD, price reached 1.2700, ranging from 1.2650 to 1.2800. The pair looks poised to rise despite the increase in oil prices.
Conclusion: The market continues to discuss inflation in the US. The Wall Street Journal said the rise in prices lowered the real incomes of the lowest paid Americans by 0.5% compared to last year. And in general, the median average real household incomes fell due to inflation of -2.9% in 2020 and to $ 67,500 per year. The Fed has no other instrument to combat price increases other than tightening monetary policy.