Inflation hits highest since 1990, Wall Street opens drop

Jakarta, CNBC Indonesia – The United States (US) stock market fell at the opening of trading Wednesday (10/11/2021), amid the release of inflation data which turned out to be soaring and sparked anxiety about its impact on the economic recovery.

The Dow Jones Industrial Average fell 40 points (-0.1%) at 08:30 local time (20:30 WIB) and after 15 minutes it deteriorated to 45.1 points (-0.12%) to 36,274.88. The S&P 500 was down 10.8 points (-0.23%) at 4,674.46. The Nasdaq fell 90.7 points (-0.57%) to 15,795.87.

The consumer price index (CPI) rose 6.2% year-on-year, or hotter than economists estimated in a Dow Jones poll that had forecast 5.9%. The figure was also the highest since 1990. On a monthly basis, the CPI jumped 0.9% or above the estimate of 0.6%.

Yield (yield) US government bonds tenor 10 years, which is the benchmark price in the market, jumped following the release. An increase in yields indicates a price correction due to investor selling. High inflation eats away at the profits from coupon bonds.

The Dow Jones closed up 0.3% yesterday at 36,319.98 while the S&P 500 fell 0.4% and snapped an 8-day streak of rally. Meanwhile, the Nasdaq plunged 0.6%. Rising inflation and rising bond yields will hit the performance of technology stocks.

Previously, the producer price index (producer price index/PPI) was reported to be up 0.6% on a monthly basis, or as expected by economists in a Dow Jones poll. However, the wholesale price index as of October rose 8.6% year-on-year, a record high in 11 years.

“The bad inflation story is still looming and needs to be addressed. We expect investors to see inflation slowing in the months after the Fed [Federal Reserve] maintain an accommodative policy,” Brent Schutte, investment director at Northwestern Mutual Wealth Management Company, told CNBC International.

The market is also monitoring the release of the third quarter of 2021 financial performance. Disney and Bumble performance releases are among those monitored as of today.

CNBC INDONESIA RESEARCH TEAM

[Gambas:Video CNBC]

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