Unveiling August CPI: Impact on Fed’s Rate Decision & Stock Market Dynamics

#ConsumerInflation #FedRateCut #StockMarketTrends

Market Update: Consumer Inflation Report and Rate Cut Expectations

As the U.S. stock market prepares for the release of the August consumer inflation report, investors are bracing for potential impacts on the Federal Reserve's upcoming rate decision. On Tuesday, the S&P 500 and Nasdaq Composite posted back-to-back gains, with the S&P 500 rising nearly 0.5% and the Nasdaq Composite increasing by 0.8%. This surge was largely driven by a strong performance from Nvidia's stock.

However, the Dow Jones Industrial Average experienced a decline of 0.2%, primarily due to a drop in JPMorgan shares. In after-hours trading, GameStop's stock plummeted by 10% following the modification of an existing market sale agreement, allowing the company to offer up to 5 million additional shares of its A common stock.

Market participants are keenly awaiting the consumer price index (CPI) figures for August, which are expected to show a 0.2% increase from the previous month and a 2.6% rise compared to the same month last year. These numbers, along with Thursday's producer price index, could influence the extent of a rate cut expected at the conclusion of the Federal Reserve's two-day meeting on September 18.

Current trading in Fed funds futures indicates a 69% probability of a 25-basis-point cut and a 31% chance of a 50-basis-point reduction, as per CME's FedWatch Tool. Invesco's chief global market strategist, Kristina Hooper, believes a 25-basis-point rate cut is likely, as a 50-basis-point reduction would raise concerns and imply a sense of accountability. Hooper also noted that sustaining restrictive monetary policy for an extended period increases the likelihood of a recession.

Key Stocks to Watch

• $GME (GameStop): Down 10% in after-hours trading following the modification of its market sale agreement.
• $NVDA (Nvidia): Strong performance drove the Nasdaq Composite's 0.8% gain on Tuesday.
• $JPM (JPMorgan): Decline in shares contributed to the Dow Jones Industrial Average's 0.2% drop on Tuesday.

Original Article: https://www.cnbc.com/2024/09/10/stock-market-today-live-updates.html