Dow Jones Surges on Inflation Data, Fed Rate-Cut Bets Intensify

Lead U.S. stocks rallied Thursday after August’s consumer-price index showed a 2.9% year-over-year gain, reinforcing expectations that the Federal Reserve will cut interest rates at next week’s meeting.

Nut Graf The latest inflation reading, coupled with a jump in weekly jobless claims, underlined a cooling labor market and buoyed bond prices, driving the 10-year Treasury yield below 4% for the first time since April. Investors now see a rate reduction as all but certain, boosting major equity benchmarks.

Market Reactions

• Equity Records: The Dow Jones Industrial Average climbed toward 46,000, while the S&P 500 and Nasdaq Composite poised for fresh closing highs.
• Bond Rally: Ten-year Treasury yields briefly dipped under 4% before a slight rebound as bond buyers seized on softer inflation and labor data.
• Jobless Claims: Weekly unemployment filings rose to 263,000, the highest since 2021, underscoring signs of labor-market weakness.

Global Central Banks

• ECB Holds Steady: The European Central Bank kept its main rate unchanged, matching consensus and signaling confidence in its recent rate-cutting strategy.
• Fed Watch: With inflation above the Fed’s 2% target, traders fully price in at least a 25-basis-point cut next Wednesday, with odds of a larger move gaining traction.

Sector Highlights

• Technology: Oracle shares retreated slightly after surging 36% the prior day on news of major AI contracts, yet remained a market driver following a $300 billion OpenAI deal.
• Energy & Commodities: Oil prices slipped amid concerns over OPEC+ production plans and lingering demand uncertainties.

Looking Ahead Investors will turn next to Friday’s retail-sales report for further clues on consumer resilience before the Fed’s policy decision. A continued slowdown in price growth and hiring could cement expectations for a mid-September rate cut.