U.S. stocks opened Wednesday’s trading session higher as investors lick their wounds after stocks suffered their worst day since June 2020.
Shortly after the opening bell on Wednesday, the S&P 500 was up 0.3%, the Dow was up 0.1%, and the Nasdaq up 0.3%.
On Tuesday, the Nasdaq fell over 5% and the S&P 500 lost more than 4% after hotter-than-expected inflation data for August likely clinched another 0.75% rate hike from the Fed this month.
The Consumer Price Index (CPI) for August showed consumer prices rose 0.1% over the prior month and 8.3% over the prior year last month, beating expectations for a month-on-month decline and an 8.1% rise over last year.
“This CPI report put cold water on a building market narrative that a potential easing in inflation data could provide the Federal Reserve (Fed) cover to ease up on its aggressive tightening campaign,” wrote Keith Lerner, chief market strategist at Truist Advisory Services, in a note to clients early Wednesday.
“This report will keep the Fed squarely focused on enemy number one – inflation. Indeed, earlier this year, Fed Chair Powell said the current backdrop is ‘not a time for tremendously nuanced readings of inflation,’ and the Fed will keep tightening policy until inflation comes down in ‘a convincing way.'”
As of Wednesday morning, investors were pricing in a roughly 30% chance of the central bank raising rates by 100 basis points next week as inflation pressures in some pockets of the economy appear to be entrenching.
In recent appearances, Powell has said the Fed will raise interest rates “until the job is done” bringing inflation back towards the Fed’s 2% goal. As of August, “core” inflation — the Fed’s preferred measure as it strips out the volatile costs of food and gas — was up 6.3% over the prior year.
In the bond market, the 10-year yield was rising again on Wednesday, up to 3.46%.
The 2-year yield, which shot up more than 15 basis points on Tuesday, stood near 3.79% early Wednesday.
WTI crude oil was up about 1.5% early Wednesday, trading near $88.60 per barrel as oil prices are now up about $5 a barrel after threatening year-to-date lows late last week.
Bitcoin, which fell about 10% on Tuesday, was steady near $20,300 through the overnight and early morning hours on Wednesday, though still down 5% on a rolling 24-hour basis.
In corporate news, shares of Block (SQ) were down about 4% in early trading analysts at Evercore ISI double-downgraded shares to Underperform from Outperform, citing “growing headwinds” to its core seller and BNPL businesses, The Fly reported.
Shares of Twitter (TWTR) also remained in focus as the stock served as one of just 5 names in the S&P 500 to gain ground on Tuesday, as the company’s shareholders voted to approve Elon Musk’s $44 billion takeover of the company. This approval also came amid Congressional testimony from a former security executive turned whistleblower, who appeared on Capitol Hill on Tuesday.