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Stocks sold off Wednesday as fresh U.S. inflation data dented traders’ hopes of a large Federal Reserve rate cut later next week.
The Dow Jones Industrial index plunged 437.53 points, or 1.1%, at 40,299.43.
The S&P 500 sagged 40.17 points to 5,455.35.
The NASDAQ dropped 31.48 points to 16,994.40.
UnitedHealth Group, Travelers and Amgen dragged the Dow lower. Bank stocks also continued to weigh on the broader market, with JPMorgan Chase shares down nearly 1% after the company gave cautious commentary on Tuesday regarding the firm’s net interest income in 2025.
The consumer price index report released Wednesday reflected a 0.2% increase in prices last month, with the annual inflation rate coming in at 2.5% — its lowest level since February 2021. The CPI was expected to increase 0.2% in the previous month and 2.6% from a year ago, according to the Dow Jones consensus estimate.
Month over month core CPI — which does not include volatile food and energy prices — came out slightly hotter-than-expected, however.
Investors are still betting on a widely anticipated interest rate cut at the Federal Reserve’s Sept. 17-18 meeting. Traders priced in an 85% chance that the Federal Open Market Committee will approve a 25-basis-point interest rate reduction, according to the CME Group’s FedWatch measure.
The new data comes as investors grapple with seasonal headwinds. September has been the worst month for the S&P 500 over the last 10 years, averaging a loss of more than 1% during that time. The broad-market index has also posted a loss in September in the last four years.
Prices for the 10-year Treasury sagged, bringing yields back up to Tuesday’s 3.65%. Treasury prices and yields move in opposite directions.
Oil prices gained $1.12 to $66.87 U.S. a barrel.
Gold prices slipped 70 cents to $2,542.40.
