Dow & Nasdaq Surge As America Releases Perplexing Inflation Data

American markets opened to a high on Thursday. DJIA (Dow Jones Industrial Average) was trading at 1.23% higher at 46,050 while the Nasdaq composite was trading 0.52% higher at 21,988.

Meanwhile, the S&P 500 hit record high with traders willing to bet on a probable rate cut from US Federal Reserve slated in the coming week.

WHY ARE TRADERS BETTING ON INTEREST RATE CUTS?

Interest rate revisions are likely to affect bond prices, equity valuations, and even affect currency markets with likelihood of a softening in the US greenback (Dollar). A rate cut traditionally also means affordable lending which in turns boosts consumer spending. This is why, in the week so far, investors have punted on the probability of a rate cut by the US Federal Reserve.

A day ago, US Producer Price Index (PPI) reflected an overall 2.6 percent increase. On Thursday, the latest data made available by the US Bureau of Labor Statistics reflected an overall 0.4% increase in CPI (Consumer Price Inflation). Although social media was abuzz with netizens correlating rise in CPI with tariffs, some netizens pointed out that inflation was spotted in categories such as "Shelter" which were more or less unrelated to Trump's tariffs.

On the official BLS website though, food category saw the highest increment at 3.2 percent - majorly attributed to the "food away from home" category as full meal services and snacks turned expensive by 4.6%.

Post the CPI data announcement, stocks and indices picked up momentum but commodities reflected a benign downward trend. Stocks such as Tesla, Nvidia, Mogu Inc, and depositories of Vince Holdings gained momentum on Nasdaq. Stock markets seem to continue the same bullish trend witnessed a day ago over expectations of a 0.25% rate cut.

WHAT NEXT?

The CPI data is expected to enthuse confidence of a rate-cut, although more cues such as labor statistics and China's trade balance data, both expected soon, will provide more clarity. In trade on Thursday, Crude Oil futures declined by 1.12% as of the time of publishing this article while Gold futures traded marginally lower.

The CPI data although may not be unrelated to India and emerging markets is likely to impact the opening trade in Indian markets on Friday.

The US Federal Open Market Committee meeting is expected to be held between 16-17 September and Jerome Powell, the Federal Reserve Chairperson is expected to announce the committee's findings after the meeting concludes.

Disclaimer: This article is solely for educational purposes.

Published on: Thursday, September 11, 2025, 08:50 PM IST