Stock Market Defies Rate Hike Odds with Strong Gains

The US stock market indexes rose despite the release of economic data that suggested a rate hike is almost certain. The Nasdaq Composite index climbed 1.3%, the S&P 500 added 1.1%, and the Dow Jones Industrial Average increased by 1%.

The Bureau of Labor Statistics reported that consumer prices rose 0.4% in August, with core inflation a tenth hotter than expected at 3.4%. The data suggests that the Federal Reserve will raise federal funds rates next week, with odds of a quarter-point hike at 86.7%, according to CME Group's FedWatch tool.

However, oil prices fell by 2.7% on Friday, but are still on pace for a weekly gain near 8%. The drop in energy prices outweighed the inflation report and contributed to the stock market gains.

Caterpillar rose 2.1%, adding 99 Dow points, while Apple climbed 2.5% and Alphabet gained 2.7%, explaining about half of the Nasdaq Composite's move.