Dollar gains, Wall Street stocks fall after hot inflation data
Traders work on the floor at the New York Stock Exchange (NYSE) as Make America Great Again (MAGA) hats hang above, in New York City, U.S., September 29, 2026. REUTERS/Jeenah Moon
NEW YORK/LONDON, Oct 14 : The dollar rose while Wall Street stocks fell on Wednesday after data showed US consumer prices rose more than expected last month, briefly reviving bets the Federal Reserve may raise interest rates, though a currency pullback later tempered those expectations.
US Labor Department data showed the core consumer price index up 0.3 per cent in September versus economist expectations for a rise of 0.2 per cent. On an annual basis, core CPI, which strips out food and energy prices, rose 2.6 per cent, above forecasts for a rise of 2.5 per cent, while the headline rate rose 3.7 per cent, above estimates for a rise of 3.6 per cent.
The dollar rose 0.35 per cent against a basket of currencies to its highest since April 2025, while US 2-year Treasury yields, which are most sensitive to shifts in expectations for inflation and monetary policy, rose 1.5 basis points on the day to 4.81 per cent.
"The reading was hotter than expected, not just with energy but elsewhere, suggesting higher tariffs and conflict-driven disruptions are bleeding into other categories," said Mark Hackett, chief market strategist at Nationwide. "Investors are coming to terms with 'higher-for-longer' inflation."
Money markets showed traders upped their bets on the chances of the Federal Reserve delivering another rate rise this month to around 33 per cent, from closer to 20 per cent prior to the data, while cementing the odds of an additional rise in December, according to LSEG data.
The euro dropped 0.38 per cent to $1.1155, while the pound fell 0.49 per cent to $1.3187. The Japanese yen was at 158.31 per dollar.
STOCKS FALL
On Wall Street, all three indexes finished lower with technology and communication services driving losses while healthcare, consumer staples and energy stocks ended higher.
The Dow Jones Industrial Average fell 0.09 per cent, the S&P 500 fell 1.11 per cent and the Nasdaq Composite fell 1.88 per cent.
More of Wall Street's big banks reported earnings, with Bank of America, which saw profits fall in the third quarter, and Morgan Stanley, which beat expectations for its third-quarter profit thanks to strong equity trading.
Europe's STOXX 600 pared some of the day's gains and finished up 0.43 per cent, while the MSCI All-World index fell 0.87 per cent.
Sentiment was already fragile prior to the consumer data, given the renewed strength in oil prices following attacks on two vessels in the Strait of Hormuz and after Iranian officials told Reuters they were deploying new tactics to hit ships, raising the risk of fresh disruption to energy supplies.
Brent crude futures, which are around their highest in nearly two weeks, rose 0.35 per cent to settle at $106.06 a barrel.
Spot gold fell 1.45 per cent to $4,096.58 an ounce.
