Equities Advance as Markets Assess August Inflation Data

Equities advanced as markets analyzed the August consumer price index.

The Bureau of Labor Statistics reported Friday that the consumer price index rose a seasonally adjusted 0.4% in August, bringing the 12-month increase to 3.4%. Both readings aligned with the Dow Jones consensus.

Core CPI, which excludes food and energy prices, rose 0.3% for the month, 0.1 percentage points above forecast. The core annual rate came in at 2.4%, in line with expectations.

This data could offer clues regarding the Federal Reserve’s next interest-rate move.

Equities finished lower for the fourth consecutive day on Thursday, pressured by rising oil prices and Treasury yields. August’s producer price index, a gauge of wholesale inflation, rose 0.4% on the month and 5.4% year-over-year.

Oil prices eased in premarket trading, but Brent crude remained above $104 a barrel.

Kyle Rodda, senior financial market analyst at Capital.com, said comments from President Donald Trump that he sees the war ending after the U.S. midterm elections “sparked concerns that the US is preparing for a conflict that will persist in its current form at least until the end of the year.”

“Surging oil prices triggered a significant shift in rates and fixed-income markets, with the resulting ripple effects causing a decline in equities and a sharp drop in precious metals,” he said.

“The 2-year yield surged by approximately 15 basis points to a two-year high, as rates markets raised the implied probability of a Fed rate hike next week to around 70%,” he noted.

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