Stocks Rise Despite Rate Hike Certainty and Slowing Economy

The stock market indexes rose despite a rate hike being virtually guaranteed next week. The Nasdaq Composite increased by 1.3%, the S&P 500 by 1.1%, and the Dow Jones Industrial Average by 1% on Friday morning. This comes after consumer prices rose 0.4% in August, while core inflation was slightly above expectations at 0.3%. The odds of a quarter-point hike at the September 15-16 meeting are now over 85%, according to CME Group's FedWatch tool.

The decline in oil prices had a significant impact on the market. Brent Crude fell by 2.7% to $104.68, but is still on pace for an 8% weekly gain. Caterpillar rose by 2.1%, and Apple and Alphabet both increased by over 2%. The tech titans' gains were likely in reaction to the inflation and energy data.

Principal Asset Management strategist Seema Shah expressed concerns that one hike may not be enough, given years of inflation running above target. In contrast, consumer sentiment has fallen to a second-lowest reading in history at 47.8, with people expecting continued inflation rises.