Traders work on the floor of the New York Stock Exchange during morning trading on August 31, 2023 in New York City.
Michael M. Santiago | Getty Images
U.S. stocks were flat on Wednesday after annual inflation topped 3%, boosting investors who have been buying shares following an early August sell-off.
The S&P 500 fell 0.1%. Nasdaq Composite Index It fell 0.38%. Dow Jones Industrial Average It increased by 37 points, or 0.09%.
The Bureau of Labor Statistics said Wednesday that consumer prices rose 2.9% from a year ago, down from 3% in June and the lowest since 2021. Month-on-month inflation was up 0.2%. Economists surveyed by Dow Jones had expected a 0.2% increase from the previous month and a 3% increase from a year ago.
So-called core inflation, which excludes food and energy, rose 0.2% from the previous month, also in line with expectations.
The report came a day after a weaker-than-expected wholesale price index boosted stock prices. The Dow rose about 1%, the S&P 500 added 1.7% and the Nasdaq added 2.4%.
Investors were eyeing the CPI release for a fuller picture of the economy’s current state and to further solidify the possibility of a rate cut at the central bank’s September meeting.
“While it may not be as chilly as yesterday’s producer price index, today’s expected consumer price index is unlikely to cause any ruckus,” said Chris Larkin, managing director of trading and investments at Morgan Stanley’s E-Trade division. “The big question now is whether the Fed will cut rates by 25 basis points next month or by 50 basis points.”
Futures market prices are split almost evenly between expectations of a 0.25 percentage point or 0.5 percentage point cut at the central bank’s Sept. 17-18 meeting and expectations predicting a total of 1 basis point cut by the end of the year, according to the CME FedWatch tool.
“If the bulk of the data over the next five weeks points to a slowdown in the economy, the Fed could be inclined to cut rates more aggressively,” Larkin said.
All three major stock indexes are above their closing levels on Aug. 2, before the global sell-off on Aug. 5 that was likely linked to a reversal of trading in Japan and concerns about economic growth.
“We think there’s a good chance the stock market will continue to perform well for the rest of the year and post another 5% gains,” said Skyler Weinand, chief investment officer at Regan Capital. “Consumer and corporate balance sheets are very strong, and we can expect to see further multiple expansion along with stable earnings and modest growth.”
