US Stocks Close Lower Despite Cooler Inflation Data

The US stock market closed lower on Wednesday as investors reacted to cooler-than-expected inflation data. The S&P 500 fell by 0.3%, while the Dow Jones Industrial Average dropped by 0.9%. In contrast, the Nasdaq 100 rose by 0.2%.

The personal consumption expenditures price index for August came in at a 3.4% annual rate, down from an initial 3.7% estimate that was later revised to 3.4%. Core PCE, which strips out volatile food and energy costs, slowed to 3% annually from 3.3% previously.

The benchmark 10-year Treasury yield ticked up by 1 basis point to 5.27%, remaining near recent multi-decade peaks. However, the cooler reading has pushed traders to wind down some bets that the Federal Reserve would hike rates again in October. According to the CME FedWatch tool, bets for a rate hike in October fell to 37% on Wednesday from 51%.

Meanwhile, some stocks saw significant gains. The VanEck Semiconductor ETF (SMH) and the iShares Semiconductor ETF (SOXX) rose about 0.5%, tracking gains in Nvidia (NVDA), Micron Tech (MU), and Advanced Micro Devices (AMD).