$S&P 500(.SPX)$ $NASDAQ(.IXIC)$

The US share market began today’s trading session down more than 2.4% after the Bureau of Labor Statistics announced that the consumer price index increased 0.4% for the month, higher than expectations. On a 12-month basis, headline inflation was up 8.2%, but off its peak of just over 9% in June. However, the increase in the core inflation rate over the past year climbed to a new peak of 6.6% from 6.3%, marking the biggest gain in 40 years according to Greg Boland, CEO of Tiger Brokers NZ. 

Fed fund futures now predict a 95% probability of a 75-point interest rate rise on 3 November (NZDT) and a 61% chance of a further 75-point rise on 15 December (NZDT). The probabilities were 75% and 7% 1 week ago. 

The US share market bounced mid-morning and eventually closed up 2.6% ahead of the US earning session that starts in earnest early tomorrow morning (NZDT) with financials Citigroup (C ), JPMorgan Chase (JPM), Morgan Stanley (MS) and Wells Fargo (WFC) all reporting pre-market open. 

The 5% market turnaround from being down 2.4% to closing up 2.6% is one of the biggest intraday bounces in US share market history. As one commentator stated, “with the much-anticipated CPI reading in the rear-view mirror, investors are likely to focus on corporate results as third quarter earnings reporting season gets underway.”