New York Stocks Rebound on Falling Oil Prices...86% Chance of September Rate Hike

Oil Prices Fall for the First Time in a While; August CPI Meets Expectations

All Three Major U.S. Indexes Rise

Rising Inflation Strengthens the Likelihood of a Rate Hike

The New York Stock Exchange rebounded for the first time in five sessions, driven by a decline in oil prices and the release of the Consumer Price Index (CPI), which was in line with expectations. However, persistent inflationary pressure has further raised the likelihood of an interest rate hike by the U.S. Federal Reserve.

On the 11th (local time), the S&P 500 Index closed up 0.86% at 7,656.98. The technology-heavy Nasdaq Composite also ended the session 0.96% higher at 26,333.04. The Dow Jones Industrial Average finished at 52,573.29, up 0.98% from the previous day.

The market appeared to settle as international oil price increases came to a halt. Brent crude futures for November delivery fell 2.8% from the previous session, closing at $104.61 per barrel. West Texas Intermediate (WTI) crude futures for October delivery also declined by 2.4% to $100.05 per barrel. These were the first declines in six and nine trading sessions, respectively.

Investor sentiment was also bolstered as the U.S. August Consumer Price Index (CPI) stayed well within the expected range. The August CPI, released on this day, rose 0.4% from the previous month and 3.4% year-on-year, matching expert forecasts.

However, the core CPI, which excludes the more volatile food and energy sectors, climbed 0.3% month-on-month, exceeding the estimate of 0.2%. The year-over-year increase was 2.4%.

As the core CPI growth rate surpassed expectations, projections that the U.S. Federal Reserve (Fed) will further tighten by raising the benchmark interest rate have gained momentum. This data served as the final inflation report ahead of the Federal Open Market Committee (FOMC) meeting scheduled for September 15–16.

Market participants immediately increased their bets on a rate hike. According to the Chicago Mercantile Exchange (CME) FedWatch, the probability in the interest rate futures market that the Fed will raise rates by 0.25 percentage points at the upcoming FOMC meeting on September 15–16 jumped from 72.4% the previous day to 86.3% in the afternoon. On the 4th, the probability was 59.4%. Some market participants have also left open the possibility of two rate hikes before the end of this year. The yield on the two-year U.S. Treasury note surged to 4.664% immediately after the CPI release, the highest level since July 2024.

This inflation report is expected to be a major test for Federal Reserve Chair Kevin Warsh. In his speech at last month's Jackson Hole meeting, Warsh emphasized, "We need to be convinced that the underlying inflation rate is moving clearly and sufficiently toward our target. Otherwise, we have work to do."

Given that the 'sticky' inflation trend described by Chair Warsh has now been confirmed, some observers warn that the Fed will lose market confidence if it fails to take concrete action at the upcoming FOMC meeting.

This content was produced with the assistance of AI translation services.