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, and the annual core rate reached 2.6%. The dollar rose, Treasury yields climbed and US stocks fell as traders raised the likelihood of a Fed rate increase this month to about 41%.
1. Inflation exceeds forecasts
US core consumer prices rose 0.3% in September from August, compared with economists’ 0.2% forecast. Core CPI increased 2.6% from a year earlier, above the 2.5% forecast, while headline inflation was 3.7%, versus estimates of 3.6%.
2. Markets react to data
The dollar rose 0.36% against a basket of currencies, and the two-year Treasury yield reached 4.87%. Money markets put the chance of a Fed rate increase this month at about 41%, up from around 20% before the data. The Dow fell 0.37%, the S&P 500 dropped 1.33% and the Nasdaq lost 2.14%.
3. Oil and earnings
Brent crude settled at $106.06 a barrel, up 0.35%, while spot gold fell 1.49% to $4,094.88 an ounce. Bank of America reported a third-quarter profit decline, while Morgan Stanley beat profit expectations on strong equity trading.
