On July 13, 2021 Tuesday, U.S. stock exchanges experienced low stocks wherein all major averages had finished the day in the red line. The reaction comes primarily on the basis of the hotter-than-expected inflation report, thus, eclipsing the strong start to the second-quarter earnings season. At the time of closing time, the tech-heavy Nasdaq Composite Index fell down by 55.59 points (0.38%) to 14,678. The Dow Jones Industrial Average shed 107.39 points (0.31%), to 34889, while S&P 500 Index was down by 15.42 points (35%), at 4369. The situation was much different to only a day before when all three stock benchmarks have secured all-time highs.
Total 10 out of 11 sectors faced declines, in addition to S&P 500. The real estate was by far the worst performer and was down by 1.32%, closely followed by consumer discretionary, which plummets by 1.18%, materials down by 0.95%, financials down by 1.06%, and industrials down by 0.97%. In contrast to all the lows, information technology actually went up by 0.44% to become the top gainer.
The decline in Wall Street comes due to the Labor Department’s report reflecting on the inflation advance, which was highest in June since last 13 years. Inflation is an important concept to take into consideration in a market as investors will now have to take into consideration how it will affect all sectors in the market, from economic recovery’s trajectory to the Federal Reserve reaction. The Labour Department further reported that its consumer price index has increased by 0.9% in June after already climbing by 0.6% in May. Keeping apart food and energy prices, core consumer prices soared by 0.9% in June just after suffering a jump of 0.7% in May.
As per reports, the annual consumer price growth rate has accelerated to 5.4% in June, from the 5% it was in May. This shows the highest level increase between stats of two months since a matching spike was seen in August 2008. Core consumer prices saw an increase of 4.5% year-over-year in June, a vast difference from the 3.8% it was in May. The drastic changes also came due to the result of an auction conducted by the Treasury Department for 30-year treasury notes. The department revealed that this month’s auction was for thirty-year bonds worth $24 Billion. The auction pulled out a bid-to-cover ratio of 2.19 and experienced a high yield of 2000%. The bid to cover ratio is a reflection of demand that showcases the number of bids for every dollar worth of securities being sold.