US stocks collapsed on Thursday, then rocketed after the September CPI report doubled expectations to 0.4% month-on-month. an interest rate hike of 75 basis points in both November and December. Loading Something is loading.
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US stocks collapsed on Thursday, then rocketed after the September CPI report showed inflation continues to reach levels not seen in four decades.
The S&P 500 fell 2.4% as the low for the day, before making up for all those losses and rising a whopping 2%. The reversal came after the S&P 500 tested 3,500 and briefly hit a low of 3,491. The 3,500 level represents a 50% retracement of the March 2020 low at about 2,200 and the January high at about 4,800.
Month-on-month inflation was 0.4%, double the expectation of an increase of just 0.2%. CPI rose 8.2% year-over-year, which was above estimates for an 8.1% increase. Even excluding food and energy prices, the month-on-month CPI rose by 0.6%, ahead of estimates for a 0.4% increase.
The hot CPI report dashed all hope that the Fed will soon turn its back on its aggressive rate hikes. According to the CME FedWatch Tool, the Fed is now expected to raise interest rates by 75 basis points in both November and December.
The shocking CPI report wiped out early morning market gains as the S&P 500 briefly rose about 1% after the UK government announced a policy reversal of its proposed tax cut plans.
Here’s where the US indices stood at 11:52 a.m. ET on Thursday:
“In one line: terrible,” Pantheon Macro’s chief economist, Ian Shepherdson, told Insider. “The downward pressure on inflation is visible everywhere except in the inflation numbers.”
Here’s what else is happening this morning:
In commodities, bonds and crypto:
West Texas Intermediate crude rose 1.70% to $88.75 a barrel. Brent oil, the international benchmark for oil, rose 1.74% to $94.06. Gold fell 0.38% to $1,671.20 an ounce. The 10-year Treasury yield increased by 5 basis points to 3.95%. Bitcoin fell 0.61% to $18,972, while ether fell 2.25% to $1,257.
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