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Dow posts worst top since 2020 on inflation data, Biden touts Inflation Reduction Act despite poor numbers in new report, Buffett takes huge loss after Apple loses value, and more financial news.
All three major indexes posted their worst daily drop since June 2020 after inflation numbers came in worse than expected, with the Dow Jones industrial average falling about 1,276 points, or 3.9%, ending near 31,104.
The S&P 500 index SPX, 0.40% shed 4.3% and the Nasdaq Composite Index COMP, 0.50% tumbled 5.2%, Market Watch reported.
Dow Jones economists had estimated inflation would fall by 0.1 percent and core to increase by 0.3 percent. Instead, the year-over-year forecasts were 8 percent and 6 percent gains, respectively, CNBC reported.
Inflation rose higher than expected in August, with the consumer price index (CPI) increasing 0.1 percent and 8.3 percent year-over-year. Core CPI, which strips out food and energy prices, rose 0.6 percent in August, double the expected amount, and 6.3 percent compared to a year ago.
A sell-off ensued as investors are expecting the Labor Department’s data to influence the Federal Reserve to hike up interest rates, US News reported.
On Tuesday, thousands gathered at the White House, where President Joe Biden celebrated last month’s passage of the Inflation Reduction Act. The move came even as the government’s latest inflation report was released, showing a rise of 8.3 percent from 2021 and a 0.1 percent increase in inflation in August over July, the Associated Press reported. The AP suggested despite the new legislation’s name, its impact on inflation is expected to be modest at best.
Critics slammed Biden for tweeting “today we’re celebrating,” as inflation worsened and stocks tumbled by their worst mark in over two years, which occurred during the height of the pandemic.
Warren Buffett’s Berkshire Hathaway, which has roughly 41 percent of its entire portfolio invested in Apple, according to the Motley Fool, took a massive loss on Tuesday.
Berkshire Hathaway finished the second quarter with nearly 895 million shares of Apple stock, which were previously worth roughly $122 billion, saw the value of its Apple stake drop by $9 billion on Tuesday.
Apple shares fell 6% as stocks tanked. The iPhone maker lost $154 billion of its market value in a single day. The one-day drop in Apple’s market value was the sixth-largest in US stock-market history, Business Insider reported.
Chevron chairman and CEO Mike Wirth said in an interview with CNN he thinks Americans should prepare themselves for higher home heating bills this winter.
“There’s certainly a risk that costs will go up,” Wirth said.
“Prices already are very high relative to history and relative to the rest of the world,” Wirth added. “We’re already seeing this impact being felt in the European economy and I do think it’s likely that Europe goes into a recession.”
