Stake logo

U.S. train station for Wall Street financial district

Historic equity turnaround as U.S. markets shrug off hot inflation data

Despite September’s higher than estimated inflation print, stock indexes rose in a very volatile day.

America’s September’ Consumer Price Index rose 0.4% over the month, up from 0.1% in August. This was well above the 0.2% consensus priced in by the markets. Despite the rise, stock markets climbed during the trading session, possibly due to the labor market showing some cool down, with initial jobless claims easing over the week. 

Equity indexes soared across the board, with the Dow Jones Industrial Average being the top performer, jumping +2.83% after being down over 500 points earlier in the day. The S&P 500 climbed +2.60%, breaking a six-day losing streak while the Nasdaq was just behind, rising +2.23%. It marked the fifth largest intraday reversal from a low in the history of the S&P 500, and the fourth largest for the Nasdaq. 

The biggest gains were in the financial services and energy sectors, climbing 4.04% and 3.99% during the day. A reversal for tech names like Apple ($AAPL) and Microsoft ($MSFT), plus a surge in semiconductors like Nvidia ($NVDA) also contributed to the move. 

The CPI increase could cause the Fed to tighten monetary policy, raising rates beyond what the market has priced in and accelerate its quantiative easing program. However, a weaker job market means less consumer demand, which should also help to restrain advances in inflation rates. 

With the recent rise in inflation, 12-month CPI is at 8.2%, with core inflation at 6.6%, a 40-year-high. Piped natural gas, transportation services and medical services showed the biggest price increases, growing 2.9%, 1.9% and 1.0%, respectively. However it’s food prices that have remained stubbornly high in the U.S., eroding the spending power of consumers. The index rose 0.8% over the month. Items like flour, potatoes and even apples all saw big increases, while prices for some items like milk and eggs saw a drop on a monthly basis. 

Apparel fell -0.3% as retailers struggle to get rid of inventory, bracing themselves for a possible incoming recession. This might be able to explain why the consumer discretionary index was an underperformer for the day, climbing a meager +1.11%. All eyes are now on the Fed and what they will do at the next FOMC meeting in November. According to CME’s FedWatch, prior to September’s CPI print, markets had been considering a reduced interest rate hike at the meeting, of potentially just 25 basis points. That possibility has now been erased, with markets now pricing in a 75 bps hike, with a tiny possibility of a 100 bps hike.

Want more?

You know what to do

Insights, trends and company deep dives delivered straight to your inbox.

Stake logo
Over 7,000 5-star reviews
App Store logoGoogle Play logo

Subscribe to our free newsletters

By subscribing, you agree to our Privacy Policy.

Stakeshop Pty Ltd, trading as Stake, ACN 610105505, is an authorised representative (Authorised Representative No. 1241398) of Sanlam Private Wealth Pty Ltd (Australian Financial Services Licence No. 337927) ('Sanlam') and an authorised representative (Authorised Representative No. 1241398) of Airwallex Pty Ltd (Australian Financial Services Licence No. 487221) ('Airwallex'). Stake is not authorised by Airwallex under Airwallex’s AFSL to arrange for clients to be issued with securities as Airwallex is not authorised under its AFSL for this purpose. Stake is not authorised by Sanlam under Sanlam’s AFSL to arrange for clients to be issued with a non-cash payment facility as Sanlam is not authorised under its AFSL for this purpose. Stake SMSF Pty Ltd (‘Stake Super’) is not licensed to provide financial product advice under the Corporations Act. This specifically applies to any financial products which are established if you instruct Stake Super to set up a self managed super fund (‘SMSF’). When you sign up to Stake Super, you are contracting with Stake SMSF Pty Ltd who will assist in the establishment of a SMSF under a ‘no advice model’. You will also be referred to Stakeshop Pty Ltd to enable your trading account and bank account to be set up in order to use the Stake Website and/or App. Stakeshop Pty Ltd will also run marketing and promotions to you under. For more information about SMSFs, see our SMSF Risks page.The information on our website or our mobile application is not intended to be an inducement, offer or solicitation to anyone in any jurisdiction in which Stake is not regulated or able to market its services. At Stake and Stake Super, we’re focused on giving you a better investing experience but we don’t take into account your personal objectives, circumstances or financial needs. Any advice given by Stake is of a general nature only. As investments carry risk, before making any investment decision, please consider if it’s right for you and seek appropriate taxation and legal advice. Please view our Financial Services GuideTerms & ConditionsPrivacy Policy and Disclaimers  before deciding to invest on or use Stake or Stake Super. By using our website or service in any way, you agree to our Privacy Policy and Terms & Conditions. All financial products involve risk and you should ensure you understand the risks involved as certain financial products may not be suitable to everyone. Past performance of any product described on this website is not a reliable indication of future performance. Stake and Stake Super are registered trademarks in Australia.

Copyright © 2024 Stake. All rights reserved.