Wall Street opens slightly lower on heightened rate hike expectations
Major equity indexes in the U.S. started the day with small losses as the data from the U.S. showed that consumer inflation rose more than expected in August, ramping up the odds of a 25 bps rate hike in December.
According to the data released by the U.S. Bureau of Labor Statistics, the Consumer Price Index for All Urban Consumers (CPI-U) increased by 0.4% on a monthly basis in August and 1.9% over the last 12 months, both surpassing the market estimates. The probability of a December rate hike jumped over 50% for the first time since July following the data according to the CME Group FedWatch.
“I don’t think they should raise rates in December, but they will, in order to counteract any kind of slowdown in the overall economy,” Robert Pavlik, chief market strategist at Boston Private Wealth, told Reuters.
On a sectoral basis, losses seen in tech-giants Facebook and Apple weigh on the technology sector while the ongoing rally in crude oil helps the energy index .SPSY stay in the positive area. As of writing, the barrel of West Texas Intermediate was trading at $50.34, gaining more than 2% on the day.
At the moment, the Dow Jones Industrial Average was flat at 22,163 points, the S&P 500 was down 1.87 points, or 0.8%, at 2,493.25, and the Nasdaq Composite was losing 23 points, or 0.35%, at 6,437.
Key headlines:
- US: CPI for all items rises 0.4% in August as shelter and gasoline indexes increase
- CME Group FedWatch's Dec hike probability rose above 50% on CPI
- US: Weekly initial claims was 284,000, a decrease of 14,000 from previous week
- BP CEO Dudley: We don't expect drop or spike in oil prices - LiveSquawk
- Fitch: U.S. debt ceiling wrangle may have negative rating impact - Reuters
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
