When you invest, your capital is at risk.

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.

Stake is the trading name of Hellostake Limited, a company registered in England and Wales (Company no. 11676409). Hellostake Limited is authorised and regulated by the UK Financial Conduct Authority under the Firm Reference Number 830771. Registered address: 85 Great Portland Street, London, W1W 7LT, United Kingdom.

When you invest, your capital is at risk.

The value of your investments can go down as well as up and you may receive back less than your original investment. Any advice 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 independent taxation and legal advice. 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, we’re focused on giving you a better investing experience but we don’t take into account your personal objectives, circumstances or financial needs. Please view ourTerms & Conditions,Privacy PolicyandDisclaimers before deciding to use or invest on Stake. By using the Stake 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

Copyright © 2024 Stake. All rights reserved.