Market Mayhem: Dow Jones Plunges Over 400 Points as Investors Fear Fed’s Cautious Rate Cut
- The Dow Jones Index plummeted by over 400 points today, September 11, 2024, following the release of the Consumer Price Index (CPI), which came in lower than expected.
- As of 8:43 pm Thai time, the Dow Jones Industrial Average stood at 40,320.36 points, marking a decline of 416.60 points or 1.02%.
- The market also faced pressure from the rebound in US government bond yields, which followed the release of the CPI index.
Dow Jones Index Falls Over 400 Points Amid Fears of Fed Interest Rate Cut
The Dow Jones Index plummeted by over 400 points today, September 11, 2024, following the release of the Consumer Price Index (CPI), which came in lower than expected. This development has led to speculation that the Federal Reserve (Fed) will likely cut interest rates by only 0.25% at its upcoming meeting next week.
As of 8:43 pm Thai time, the Dow Jones Industrial Average stood at 40,320.36 points, marking a decline of 416.60 points or 1.02%.
The market also faced pressure from the rebound in US government bond yields, which followed the release of the CPI index.
Fed Interest Rate Cut Predictions
Analysts predict that the Fed will cut interest rates by only 0.25% next week, citing the lower-than-expected CPI index as a key factor. This development reduces the urgency for the Fed to implement a more significant rate cut of 0.50%.
“The CPI numbers suggest a rate cut of just 0.25% this month, reducing the need for a more substantial cut of 0.50%,” said Pimco analysts.
Investors are increasingly confident that the Fed will opt for a 0.25% interest rate cut next week, following the release of the CPI index.
FedWatch Tool Indicates Investor Sentiment
CME Group’s latest FedWatch Tool reveals that investors are placing significant pressure on the Fed to cut interest rates by 0.25% to 5.00-5.25% at the September 18 meeting, with 85% of investors backing this prediction.
In contrast, only 15% of investors believe the Fed will cut interest rates by 0.50% to 4.75-5.00% at the same meeting.
Consumer Price Index (CPI) Report
The US Department of Labor released the Consumer Price Index (CPI) report for August, which measures inflation in consumer spending.
The headline CPI, including food and energy categories, increased by 2.5% year-over-year in August, falling short of analysts’ expectations of 2.6% after rising 2.9% in July.
On a monthly basis, the headline CPI rose 0.2% in August, in line with analysts’ expectations, from 0.2% in July.
The Core CPI, excluding food and energy, increased by 3.2% year-over-year in August, meeting analyst forecasts of 3.2% in July.
On a monthly basis, the Core CPI rose 0.3% in August, beating analysts’ expectations of 0.2% from 0.2% in July.