US stock markets closed yesterday their worst session since June 2020, with a 4.3% drop for the S&P 500. The inflation data, despite being lower than last month thanks to lower energy prices, showed that more stable components such as the cost of rent or the price of services continue their ascent. Investors interpreted this as a sign that the Fed will continue on its path of rapid hikes and even the implied odds on interest rate futures now assign a 20% chance of seeing a 100 b.p. hike at the next meeting, which will be held on Wednesday next week. In addition, there was also no safe haven yesterday in bonds, where there was a generalized sell-off especially in the short tranches taking US 2-year rates to the highest levels since 2007.
By sector in the United States, the sell-off was centered on growth and technology companies. Nasdaq dropped a little over 5%, with the semiconductor sub-sector being the most severely punished with falls of 6.6%. Alphabet (-5.9%) and Meta (-9.4%) also had a difficult session, as the court that followed the collusion case between the two companies ruled in their favor, but left the door open to other complaints for possible abuse of power in the online advertising market. On the other hand, the defensive sectors managed to weather yesterday’s falls better, with utilities (-2.7%) and health care (-3.2%) being the most prominent. Finally, the energy sector (-2.4%), penalized in recent sessions, this time managed to become the best performer of the session due to the limited falls in oil prices.