S&P 500, Nasdaq climb as soft inflation dampens Fed rate hike expectations
The Nasdaq jumped more than 1% on Wednesday, leading Wall Street gains after a softer-than-anticipated inflation reading reduced expectations for a Federal Reserve rate hike in October. While the S&P 500 showed mixed performance across sources, with some reporting a dip and others reporting gains, both indexes achieved their second consecutive quarterly increase. The Federal Reserve's preferred gauge reported core inflation at 3.0% for August, a figure significantly lower than analysts expected, prompting investors to believe the central bank may delay further interest rate increases.
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- ✓ The Nasdaq rose more than 1% on Wednesday.
- ✓ The Federal Reserve's preferred gauge showed core inflation at 3.0% in August.
- ✓ The S&P 500 and Nasdaq both recorded their second straight quarterly gains.
What changed
August core inflation arrived at 3.0%, lower than expected, triggering a rally in the Nasdaq.
Live updates
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Nasdaq and S&P 500 Rise as Soft Inflation Data Cools Rate Hike Fears
The Nasdaq jumped more than 1% on Wednesday, leading Wall Street gains after a softer-than-anticipated inflation reading reduced expectations for a Federal Reserve rate hike in October. While the S&P 500 showed mixed performance across sources, with some reporting a dip and others reporting gains, both indexes achieved their second consecutive quarterly increase. The Federal Reserve's preferred gauge reported core inflation at 3.0% for August, a figure significantly lower than analysts expected, prompting investors to believe the central bank may delay further interest rate increases.
Why it matters
Investors closely monitor inflation gauges to predict Federal Reserve monetary policy. Lower inflation typically reduces the necessity for high interest rates, which generally supports equity valuations. This data follows a period of stubborn pricing pressures attributed by some to the ongoing Iran war.
What is confirmed
- The Nasdaq rose more than 1% on Wednesday.
- The Federal Reserve's preferred gauge showed core inflation at 3.0% in August.
- The S&P 500 and Nasdaq both recorded their second straight quarterly gains.
Still unconfirmed
- The S&P 500 dipped on Wednesday.
- US inflation remained stubborn last month due to the Iran war lifting prices.
What to watch next
- Federal Reserve policy decision regarding October rate hikes
- Upcoming PCE inflation data reports
confidence 85%Sources used for this update (20)
- Yahoo Finance — Stock market today: Dow, S&P 500, Nasdaq futures little changed ahead of PCE inflation data
- reuters.com — US stock futures inch up as yields ease, inflation report looms
- CNBC — Fed’s preferred gauge showed core inflation at 3.0% in August, much lighter than expected
- finance.yahoo.com — US stock futures slip ahead of inflation report
- Politico — Cooler inflation could buy the Fed, Trump time on another rate hike
- cnn.com — US inflation remained stubborn last month as Iran war continued to lift prices
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- squawknews.com — S&P 500, Nasdaq Climb as Soft Inflation Cools Fed… - SquawkNews
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