Dow jumps 400 points to record as August inflation increase likely won’t derail Fed rate cut
Stocks rose on Thursday as traders anticipated that the latest reading of a key consumer inflation gauge won’t stand in the way of the Federal Reserve lowering its benchmark interest rate next week.
The Dow Jones Industrial Average gained 464 points, or 1%. The S&P 500 climbed 0.5% and had touched a fresh record earlier in the session. The Nasdaq Composite advanced 0.4%.
It was a confusing batch of numbers, with the consumer price index reading for August coming in hotter than expected on a monthly basis but in line with expectations on an annual basis.
The CPI reading showed an increase of 0.4% for the month, according to the Bureau of Labor Statistics, higher than the 0.3% that economists polled by Dow Jones were expecting. However, the index recorded 2.9% on a 12-month basis, as expected.
Additionally, so-called core CPI, which excludes volatile food and energy, increased 0.3% in August and 3.1% from a year ago. Both were in line with the Dow Jones forecasts.
The report comes a day after the producer price index showed an unexpected decline of 0.1% on the month. The PPI rose 2.6% on a 12-month basis.
Also on Thursday, weekly jobless claims saw a surprise jump. The figure for the week ended Sept. 6 increased 27,000 from the previous period to a seasonally adjusted 263,000. That’s more than the 235,000 that was penciled in.
Traders still generally expect that the Fed will cut rates by a quarter percentage point on Sept. 17, per the CME FedWatch tool. They even slightly increased their bets that the central bank will cut by a half percentage point.
Source : CNBC
