Market: Wall Street ends the day in the green after CPI figures

(CercleFinance.com) - Wall Street ended the session higher following the release of inflation figures which ruled out the scenario of a further, more sustained cut by the Federal Reserve.


At the end of the session, the Dow Jones index was up 0.31%, while the Nasdaq gained 2.17% after managing to string together two consecutive sessions of gains on Monday and Tuesday, the first in a month.

This morning, the Labor Department announced that the Consumer Price Index (CPI) rose by 0.2% in August, as in July and in line with economists' expectations.

Over a year, it rose by 2.5%, slightly below the average consensus forecast (+2.6%).

And while core inflation (excluding food and energy) accelerated to 0.3% last month from +0.2% in July, year-on-year growth (+3.2%) remained in line with consensus.

While these figures, which are broadly in line with expectations, bolster expectations of a Fed rate cut next week, they also seem to distance us from the prospect of a sharp 50 basis point cut.

These data support our view that the Federal Reserve will cut rates by 'only' 25 basis points next week, and not by 50 basis points as many investors thought," commented Commerzbank's economists.

In Paris, CPR AM's teams are referring to an inflation report that is "badly oriented" one week ahead of the Fed's monetary policy committee (FOMC).

"While total inflation surprises on the downside (+2.5%, the lowest since February 2021), underlying inflation surprises on the upside, mainly due to the 'housing' component", reacts Bastien Drut, the asset manager's head of strategy and economic research.

According to the FedWatch barometer, investors now have an 81% probability of a 25 basis point hike on Wednesday September 18, and a 19% probability of a larger 50 basis point hike.

On the bond market, the yield on ten-year US Treasury bonds eased towards 3.62%, after initially rebounding in the wake of the statistics.

At the same time, the dollar rallied against the euro, returning to the 1.1015 zone.

Data published by the U.S. Energy Information Administration (EIA) showed that U.S. crude oil inventories stood at 419.1 million barrels for the week ending September 2, indicating a limited increase of 0.8 million barrels on the previous week.


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