Stocks Rise Despite Strong Inflation Report and Rate Hike Expectations
The stock market indexes rose on Friday morning despite a strong inflation report that solidified expectations of a rate hike by the Federal Reserve. The Nasdaq Composite, S&P 500, and Dow Jones Industrial Average all increased by over 1% each.
Consumer prices rose 0.4% in August, matching economists' estimates, while core inflation came in slightly above expectations at 0.3%. The report also showed that gasoline accounted for more than a third of the headline increase, indicating where pricing pressure is coming from.
The Fed's decision to raise federal funds rates next week seems almost certain now, with CME Group's FedWatch tool putting the odds of a quarter-point hike at 86.7%, up from 72.4% yesterday and 59.4% a week ago.
However, stocks rose anyway, thanks to falling oil prices. Brent crude slid 2.7% to $104.68, though it's still on pace for a weekly increase of roughly 8%. Caterpillar, Apple, and Alphabet were among the top gainers in the market indexes.