Wall Street Reacts as Surprise Wholesale Inflation Data Casts Doubt on September Fed Rate Cut
Wall Street Reacts as Surprise Wholesale Inflation Data Casts Doubt on September Fed Rate Cut
NEW YORK – Major U.S. stock indices experienced declines on Thursday following an unexpected surge in wholesale inflation, which surpassed economists’ forecasts for last month. Despite broad market weakness, significant gains from leading Big Tech companies, including Amazon, helped to mitigate overall losses on Wall Street.
Seven out of ten stocks in the S&P 500 saw declines, yet the index managed a marginal gain of less than 0.1%, reaching a new all-time high. The Dow Jones Industrial Average dipped slightly by 11 points, and the Nasdaq composite also saw a minor decrease of less than 0.1% from its recent record.
The latest inflation report revealed that U.S. wholesale prices jumped 3.3% last month compared to a year prior, significantly exceeding the 2.5% rate predicted by economists. This higher-than-expected figure suggests potential upward pressure on consumer prices and has led traders to reconsider the likelihood of a Federal Reserve interest rate cut in September. Previously, a September rate cut was widely anticipated, with a near 100% certainty just a day prior. However, data from CME Group now indicates a 7.4% chance that the Fed may opt to hold rates steady.
The prospect of sustained higher interest rates particularly impacts smaller companies, as borrowing costs remain elevated. The Russell 2000 index of small-cap U.S. stocks tumbled 1.2% in response. Conversely, strong performances from companies like Fossil Group, which surged 29.8% on better-than-expected profits and strategic financial plans, provided some market resilience. Big Tech giants like Amazon, up 2.9% following its expansion of same-day grocery delivery, also played a crucial role in offsetting broader market downturns due to their substantial market capitalization and influence on major indices.
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