Traders work on the trading floor of the New York Stock Exchange (NYSE) in New York City, USA, September 9, 2024.
Brendan McDermid | Reuters
There were sell-offs on Wednesday as new U.S. inflation data dampened traders’ hopes of a sharp interest rate cut by the Federal Reserve later next week.
The S&P500 was trading 1.1% lower, while the Dow Jones Industrial Average lost 548 points or 1.4%. The Nasdaq-Composite lost about 0.7%.
UnitedHealth Group, Travelers And Amgen pulled the Dow down. Bank stocks also continued to weigh on the broader market. JPMorgan Chase Shares fell more than 1.5% after the company made cautious comments on Tuesday about the company’s 2025 net interest income.
Stocks plunged after the core consumer price index, which excludes volatile food and energy categories, rose slightly more than expected, dampening investors’ hopes of a half-point rate cut by the Federal Reserve. Traders are now pricing in an 85% probability that the central bank will decide on a 25 basis point rate cut at its Sept. 17-18 meeting, according to CME Group’s FedWatch indicator. However, the headline CPI hit its lowest annual level since February 2021.
“By itself, the CPI isn’t terrible,” said Steve Sosnick, chief strategist at Interactive Brokers. “But what the market didn’t need was a core reading that was higher than expected. I think that was a big dent in a market that had hoped that a 50 basis point rate cut might be possible. Those expectations have all but evaporated.”
The new data comes at a time when investors are grappling with seasonal headwinds. September was the worst month for the S&P 500 in the past decade, with an average loss of more than 1 percent during that time. The broad market index has also posted losses in September for the past four years.
