S&P 500 Slips as Inflation Hike Odds Jump to 87%

The recent inflation reading has put the Federal Reserve back in focus, causing the S&P 500 to slip 0.8% for the week.

The August consumer price index rose 0.4% from the prior month, matching expectations, but 'core' inflation, which strips out food and energy to better show underlying trends, ran at 0.3%, above the 0.2% economists expected.

This surprise quickly reset expectations for the Fed's next meeting: CME Group showed traders lifting the implied odds of a 0.25 percentage point hike to 87% from 72% a day earlier.

The market reaction was notable because it wasn't the usual sector playbook that worked this time. Health care fell 3.6% and materials dropped 2.7%, while energy was an exception, up 2%, helped by firmer oil prices.