Inflation Data Weighs on Stocks as Fed Outlook Remains Uncertain
U.S. stocks closed lower on Wednesday as inflation data showed that the Federal Reserve's preferred gauge remains above its 2% target, leading investors to adopt a wait-and-see stance ahead of AI chip leader Nvidia's earnings release.
The Dow Jones Industrial Average fell by 113.52 points, or 0.21%, to close at 53,463.88, snapping a three-session winning streak. The Nasdaq Composite slipped 15.12 points, or 0.06%, to 26,136.18, while the S&P 500 edged down 0.99 points.
The U.S. Department of Commerce reported that the headline Personal Consumption Expenditures (PCE) price index rose 3.7% year-over-year in July, slightly above the 3.6% consensus estimate. Core PCE, which strips out food and energy, held steady at 3.3% year-over-year.
Market-implied odds of a September rate increase currently stand at 38.1%, with markets assigning a 64% probability that the Fed will keep its benchmark rate unchanged at next month's meeting. However, expectations for a hike before year-end are building.