Wall Street saw a smart recovery after a massive decline in early trade. The Dow slipped more than 600 points in opening trade. However, the US benchmark indices closed on a higher note, paring earlier losses. The fall in the indices came after the US CPI data showed that the annual inflation rate slowed for a fifth consecutive month to 2.5% in August 2024. It is the lowest level since February 2021, from 2.9% in July, and below forecasts of 2.6%.
However, investors analysed the inflation data, pouring money back into the markets. The S&P 500 advanced 1.07% settling the day’s trading at 5,554.13. From October 2022, this was the first time that the broader market index slipped 1% and then closed higher by more than 1%, intraday.
The Dow Jones, an index comprising the 30 biggest stocks, gained 124.75 points, or 0.31%, to close at 40,861.71. It declined as much as 743.89 points during the day. The Nasdaq Composite rose 2.17% to end at 17,395.53.
“Today’s data won’t deter the Fed from cutting interest rates next week, it reduces the chance of an outsize reduction. Nevertheless, the main concern for policymakers has been the labour market, which is more likely to drive policy discussions and decisions in the months ahead. They’ll also have more data to consider leading up to their November and December meetings,” said Amit Goel, Co-Founder & Chief Global Strategist, Pace 360, SEBI registered multi-asset PMS & Category III AIF.
US inflation picked up in August on higher prices for housing and travel, undercutting the chances of an outsize Federal Reserve interest-rate cut next week, said Goel. CPI was dragged down by cheaper gasoline prices said Goel.