Stocks fall, dollar rallies as US inflation tops forecasts
SPY•US core CPI rose 0.3% in September from August, above the 0.2% forecast, while annual core inflation reached 2.6%. The dollar and Treasury yields rose as US stocks fell, and traders increased their estimated odds of a Federal Reserve rate rise this month to around 41%.
1. Inflation lifts yields
The dollar rose and US Treasury yields jumped after September consumer-price data exceeded forecasts, while Wall Street stocks fell. Core CPI rose 0.3% month over month, against expectations of 0.2%; annual core CPI was 2.6%, compared with a 2.5% forecast, and headline inflation was 3.7%, above the 3.6% estimate.
2. Markets reprice rates
The dollar gained 0.68% against a basket of currencies, and the two-year Treasury yield rose 7.2 basis points to 4.87%. Money markets put the odds of a Federal Reserve rate rise this month at around 41%, up from closer to 20% before the report; traders also cemented expectations for another rise in December.
3. Stocks and commodities
The Dow fell 0.17%, the S&P 500 lost 0.94% and the Nasdaq dropped 1.3%. Technology and industrial shares led declines, while healthcare, consumer staples and energy shares rose. Brent crude was near $106 a barrel, and spot gold fell 1.63% to $4,088.96 an ounce.
