US open: Major indices in the red following CPI reading

dl exchange place wall st street pl new york city nyc ny nyse stock exchange dow jones sp nasdaq finance dollar dollars us usa united states of america — Exchange PlaceSharecast photo / Josh White

Wall Street stocks were firmly in the red early on Wednesday following a hotter-than-expected inflation reading.

As of 1520 BST, the Dow Jones Industrial Average was down 1.30% at 30,578.05, while the S&P 500 was 1.19% weaker at 3,773.53 and the Nasdaq Composite came out the gate 1.16% softer at 11,134.17.

The Dow opened 403.28 points lower on Wednesday, extending losses recorded in the previous session as global economic growth concerns remained in focus ahead of a potentially rough earnings season.

Wednesday's primary focus will be news that US inflation surged to 9.1% in June, ahead of expectations for a print of 8.8% to the highest level seen since November 1981. According to the Bureau of Labor Statistics, June's reading, up from 8.6% in May, comes as energy prices rose 41.6% last month, the most since April 1980.

At the core level, which excludes food and energy, inflation increased 5.9% - slightly below the 6% clip in May but above forecasts for a reading of 5.7%.

Market participants believe the hot CPI reading may lead the Federal Bank to hike interest rates by another 75 basis points at this month's meeting - just a month after the central bank raised benchmark interest rates by three-quarters of a percentage point in its most aggressive rate hike since 1994.

Also drawing an amount of investor attention was news that the International Monetary Fund has cut its GDP forecast for the US to 2.% from its previous level of 2.9%. The IMF also reduced 2023's growth estimate to 1% from its initial reading of 1.7% and predicted that the US unemployment rate could increase to as high as 4.6% next year.

Elsewhere on the macro front, US mortgage applications fell 1.7% in the week ended 8 July, according to the Mortgage Bankers Association, led by a 3.6% decline in the purchase index. Applications to refinance a home rose 2.2% as the average interest rate on the benchmark 30-year fixed-rate mortgage was unchanged at 5.74%

Still to come, the Fed's beige book and last month's budget statement will be published at 1900 BST.

In the corporate space, Delta Air Lines posted a quarterly profit as price increases helped cover heightened operating costs throughout the period as a result of Russia's invasion of neighbouring Ukraine.

Reporting by Iain Gilbert at Sharecast.com

Dow Jones - Risers

Procter & Gamble Co. (PG) $144.90 0.11%
Chevron Corp. (CVX) $139.01 0.06%
Dowdupont Inc. (DWDP) $30.52 0.00%
Honeywell International Inc. (HON) $230.94 0.00%
Merck & Co. Inc. (MRK) $93.55 -0.05%
Amgen Inc. (AMGN) $246.49 -0.19%
Nike Inc. (NKE) $103.54 -0.21%
Johnson & Johnson (JNJ) $175.39 -0.26%
McDonald's Corp. (MCD) $250.33 -0.46%
Caterpillar Inc. (CAT) $173.52 -0.56%