Stocks have moved sharply lower over the course of the trading day on Wednesday, largely offsetting the rebound seen over the two previous sessions. With the pullback on the day, the Dow has fallen to its lowest intraday level in nearly a month.
Currently, the major averages are just off their lows of the session. The Dow is down 702.12 points or 1.7 percent at 40,034.84, the Nasdaq is down 211.98 points or 1.3 percent at 16,813.90 and the S&P 500 is down 84.97 points or 1.6 percent at 5,410.55.
The sell-off on Wall Street comes following the release of the Labor Department’s closely watched report on consumer price inflation in the month of August.
While the report showed consumer prices increased in line with economist estimates, core consumer prices rose by slightly more than expected.
The Labor Department said its consumer price index rose by 0.2 percent in August, matching the uptick seen in July as well as economist estimates.
However, core consumer prices, which exclude food and energy prices, climbed by 0.3 percent in August after rising by 0.2 percent in July. Economists had expected core prices to rise by another 0.2 percent.
The Federal Reserve is still likely to lower interest rates next week, but the bigger than expected increase by core consumer prices is seen as reducing the chances the central bank lowers rates by 50 basis points.
Following the report, CME Group’s FedWatch Tool is indicating an 83.0 percent chance of a quarter point rate cut and just a 17.0 percent chance of a half-point rate cut.
“It’s possible that some will be disappointed that there wasn’t a lower-than-expected inflation reading, which might have given the Fed more room to cut 50 bps,” said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.
He added, “But most of the Fed speakers have already telegraphed their desire to start slowly and not begin with a jumbo cut.”
The report also said the annual rate of consumer price growth slowed to 2.5 percent in August from 2.9 percent in July. Economists had expected the year-over-year growth to decelerate to 2.6 percent.
The annual rate of core consumer price growth was unchanged from the previous month at 3.2 percent in August, in line with economist estimates.
Sector News
Interest rate-sensitive housing stocks have moved sharply lower on the day, dragging the Philadelphia Housing Sector Index down by 2.8 percent.
Considerable weakness has also emerged among banking stocks, with the KBW Bank Index tumbling by 2.7 percent to its lowest intraday level in almost a month.
Transportation stocks have also shown a significant move to the downside, as reflected by the 2.4 percent slump by the Dow Jones Transportation Average.
Brokerage, energy and retail stocks are also seeing notable weakness, moving lower along with most of the other major sectors.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index tumbled by 1.5 percent, while China’s Shanghai Composite Index slid by 0.8 percent.
The major European markets have also moved to the downside over the course of the session. While the French CAC 40 Index is down by 0.4 percent, the U.K.’s FTSE 100 Index is down by 0.3 percent and the German DAX Index is down by 0.1 percent.
In the bond market, treasuries have moved higher over the course of the session after seeing initial weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.4 basis points at 3.620 percent.
Business News
U.S. Stocks Move Sharply Lower As Inflation Data Reduces Chances Of Half-Point Rate Cut
2024-09-11 14:55:20
