CPI Report Triggers Dow's 600-Point Drop as Rate Cut Hopes Diminish

Wednesday, 11 September 2024, 13:10

CPI report reveals significant shifts in investor sentiment, causing the Dow to plummet by 600 points. This CPI data has altered expectations for Federal Reserve rate cuts.
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CPI Report Triggers Dow's 600-Point Drop as Rate Cut Hopes Diminish

CPI Report Influences Market Dynamics

On Wednesday, the latest Consumer Price Index (CPI) report sparked chaos in the markets, sending the Dow tumbling by as much as 700 points, a staggering 1.7% loss, before minor recovery later in the day. With inflation showing an annual rise of just 2.5%, the lowest since February 2021, investors reacted swiftly as optimism for a half-point Federal Reserve rate cut fizzled.

Core CPI Stuns Economists

The core CPI, which excludes volatile food and energy prices, presented a 0.3% increase—unexpectedly higher than the 0.2% rise forecasted by economists. Such unanticipated inflation figures are crucial for the Fed's upcoming decisions on interest rates.

  • Current trader predictions show a:
  • 15% chance of a half-point cut
  • 85% chance of a quarter-point cut for this month

This drastic shift in expectations underlines how sensitive markets are to inflation data and highlights the increasingly cautious approach the Federal Reserve may adopt regarding interest rate adjustments.

Market Responses to CPI Changes

Investors typically benefit from lower rates, as they enable cheaper borrowing, potentially enhancing profitability. In stark contrast to Monday's optimism, when major indices closed up by 1.2%, September continues to reveal its reputation for volatility in stock performance.


This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.


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