The US Consumer Price Index data, a key number for the Federal Reserve’s (FED) rate policy, has been released. And the market is reacting.
Wall Street falls slightly on Wednesday after the annual inflation rate in the United States fell below 3%. The stock market thus erased the initial rise that had encouraged investors who had been entering into equities after the correction in early August.
The broad market index is down 0.8%, while the Nasdaq Composite is up 0.5%. The Dow Jones Industrial Average is up 0.6%. The communications and services sector, which includes companies such as Google and Metapulls the square downwards with a cut of –2.5% as a whole.
Consumer prices rose 2.9% year-over-year, down from 3% in June and marking the lowest reading since 2021, the U.S. Bureau of Labor Statistics reported. Month-over-month, prices rose 0.2%. Economists surveyed by Dow Jones had expected a 0.2% increase from the previous month and a 3% increase year-over-year.
The so-called core inflation, which excludes food and energy from the headline figure, rose 0.2% in the month, also in line with expectations.
The market reaction
The report comes a day after weaker-than-expected wholesale inflation data boosted the New York stock market. Investors were awaiting the CPI reading to get a full picture of the state of the economy and cement the prospect of a rate cut at the central bank’s September meeting.
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NYSE
“It hasn’t been as quiet as yesterday’s PPI, but today’s CPI, as expected, will likely not shake expectations,” said Chris Larkin, managing director of trading and investment at Morgan Stanley’s E-Trade. “The main question now is whether the Fed will cut rates by 25 or 50 basis points next month.”
All three major indexes are now above their closing levels of August 2, which was the session before the global sell-off of August 5, which appeared to be related to the liquidation of trades in Japan and concerns about economic growth.
Source: Ambito
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