Stocks Rise as Inflation Data Confirms Rate Hike
The US stock market indexes rose despite inflation data that suggested a rate hike was almost certain. The Nasdaq Composite rose 1.3%, the S&P 500 added 1.1%, and the Dow Jones Industrial Average climbed 1%. Consumer prices rose 0.4% in August and 3.4% from a year ago, with core inflation slightly higher than expected.
The Federal Reserve's decision to raise interest rates next week seems all but guaranteed, with odds at 86.7%, according to the CME Group's FedWatch tool. However, the market reacted positively to falling oil prices, which outweighed the concerns over inflation.
Caterpillar rose 2.1% and Apple climbed 2.5%, while Alphabet gained 2.7%. These tech titans contributed significantly to the Nasdaq Composite's move. Despite the strong gains, some analysts are cautioning that one rate hike may not be enough to curb inflation, which has been running above target for years.
The University of Michigan's consumer sentiment index fell 7.5% in September to 47.8, its second-lowest reading in history. People expect inflation to continue rising, and the constrained oil shipping system isn't helping.