Stocks move as inflation offers a surprise for analysts
The US Consumer Price Index was released Friday coming in under the expected levels to hit an annualized rate of three per cent. The index only rose by 0.3 per cent in September, and ended up ten basis points below what Dow Jones surveyed economists had predicted for the month.
Core CPI, which tends to be favoured by the US central bank, saw a 0.2 per cent gain on the month with an annual rate of 3 per cent as well. In both cases the data from the US Bureau of Labor Statistics was 0.1 per cent lower than economists had estimated.
US equity markets reacted warmly to the release, with US stocks hitting new heights. The Dow Jones Industrial average rose aroun 1.2 per cent during the day on Friday, according to CNBC. The S&P 500 has added around one per cent while the Nasdaq Composite has risen around 1.3 per cent. Both the Dow Jones and the S&P 500 appear set to break major historic thresholds.
The inflation print increased the odds of interest rate cuts by the US Federal Reserve both next week and in December. According to the CME FedWatch tool, the odds of a cut on Wednesday of next week, the next FOMC meeting, are above 95 per cent. The odds of a cut at the final Fed meeting in December are now higher than 98.5 per cent.
