U.S. stocks jumped more than 1% following the release of inflation data

U.S. stocks rose sharply in the first few minutes after the market opened on September 11. One of the main reasons was the August inflation data: on a core basis, it came in line with economists’ forecasts. In addition, falling oil prices are having a positive impact on the market: the price of U.S. WTI crude has once again dropped below $100 per barrel.

The S&P 500 broad-market index rose 1.1%. The Nasdaq Composite “tech” index rose by roughly the same amount. The Dow Jones Industrial Average, a "blue-chip" index, outperformed them, gaining 1.2%.

The U.S. Consumer Price Index (CPI) rose 3.4% year-over-year in August—slightly more than economists had expected. However, on a core basis—excluding volatile food and energy prices—it rose by 2.4%, in line with forecasts. Following the release of the data, traders now see the probability of an interest rate hike at the next U.S. Federal Reserve (Fed) meeting on September 15–16 as exceeding 85%, according to the CME Group’s FedWatch tool.

“The discussion quickly shifted from whether the Fed would raise [rates] to the more important question of how many hikes this cycle will ultimately require. We do not expect the Fed to raise rates just once and then stop. This is no longer simply a matter of fine-tuning the economy. After half a decade of inflation above target, policymakers will likely decide that restoring price stability will require more than one rate hike,” said Sima Sha, senior global strategist at Principal Asset Management (quoted by Bloomberg).

The price of WTI crude oil fell nearly 4% during trading on September 11, to $98.50 per barrel. The international benchmark, Brent, lost roughly the same amount and hit a daily low of $107.60 per barrel. Six Gulf countries are discussing the possibility of a meeting with Iran to discuss the future status of the Strait of Hormuz, the Financial Times and Bloomberg reported, citing sources. This could be the first such meeting since the start of the U.S.-Iran conflict in late February. According to Bloomberg’s sources, Oman—which lies on the opposite shore of the strait from Iran—is attempting to organize the meeting. Oman and Iran have been negotiating shipping regulations in the Strait of Hormuz in recent months.

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