- Stocks fell as another major chipmaker's downbeat outlook fueled recession fears, with many traders unwilling to take any risks ahead of Wednesday's crucial inflation reading.
- A rally that pushed the S&P 500 up more than 10% from its June lows hit a snag on the fourth day of losses. The Nasdaq 100 fell after Micron Technology issued a warning, adding to evidence of chip demand collapsing. The Philadelphia semiconductor index fell 4.6%, with all 30 companies falling. Bed Bath & Beyond and Gamestop sputtered as a result of the surge in meme shares.
- Investors have become more cautious ahead of the July consumer-price index, which is expected to cool slightly while remaining high. The report will follow recent job data highlighting solid wage growth and US productivity data highlighting another surge in labour costs, which could complicate the Federal Reserve's efforts to control inflation.
- Timing the peak in inflation is difficult, especially after June's CPI print was hotter than expected, but being correct has brought investors a handsome return.
- According to data compiled by the Leuthold Group, those who purchased the S&P 500 at major inflation peaks dating back to 1940 saw the index rise 16% on average over the next 12 months. A significant caveat is that the price-to-earnings ratio has previously averaged 12.7 on a normalised basis, compared to above 20 now.
