Finance

US stocks close higher after worst fall in 2 years as investors assess impact of August inflation on Fed’s next move

US stocks close higher after worst fall in 2 years as investors assess impact of August inflation on Fed’s next move

U.S. stocks closed with modest gains on Wednesday, rebounding slightly from the market’s worst session in two years amid volatile trading.

The indices opened higher, then went into the negative before returning to positive territory in the final minutes of the session. Early Wednesday, the producer price index fell 0.1% in August from the previous month, in line with expectations. But markets were still digesting Tuesday’s consumer price index report, which showed a surprise monthly gain that cemented views for another big rate hike at the Federal Reserve’s meeting next week.

While investors are still mostly betting on a third straight hike of 75 basis points, the odds of a 100 basis point increase have increased since Tuesday.

Here are the US indices as the market closed at 4:30pm on Wednesday:

  • S&P 500: 3,946.01, up 0.34%
  • Dow Jones Industrial Average: 31,135.09, up 0.10% (30.12 points)
  • Nasdaq Composite: 11,719.68, up 0.74%

Nomura strategist Charlie McElligott says the market is beginning to recognize that a hard landing is likely as the latest CPI report on Tuesday showed inflation remains a persistent concern that the Fed will need to remain aggressive on.


And noted investor Mark Mobius thinks the Federal Reserve could raise interest rates by as much as 9% if consumer inflation remains around 8%.

Elsewhere, the European Union is demanding $140 billion in windfall taxes from low-cost energy companies to protect consumers from rising energy prices on the continent.

Oil rose, with West Texas Intermediate gaining 0.74% to $87.94 a barrel. International benchmark Brent crude rose 0.71% to $93.82.

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Gold fell 0.42% to $1,694.43 an ounce. The 10-year yield fell 1.7 basis points to 3.406%.

Bitcoin gained 3% to $19,848.02.

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