Wall Street opened mixed on Wednesday, October 14 US consumer prices rose the most since April, raising bond yields and worries that the Federal Reserve will need to raise interest rates to deal with inflation.
Nasdaq Composite dropped 0.65% to 27,027.44, S&P 500 declined 0.38% to 7,775.9 while Dow Jones Industrial Average traded 0.18% up at 51,764.26 by 7 pm IST.
Driven by rising fuel costs, the US consumer price index climbed 0.6% in September from the previous month, while it stood at 3.7% year-on-year according to Bureau of Labor Statistics data, released on Wednesday. After the inflation data released, Treasury yields jumped, with the 10-year yield climbing more than 7 basis points to 5.29%, while the 30-year Treasury yield was up more than 4 basis points at 5.6%.
"It's clear as ever that inflation is stubborn and moving in the wrong direction,” Bloomberg quoted Skyler Weinand at Regan Capital. “While we expect the Fed to pause on any rate changes in October, we expect rate hikes to resume in December and continuing until June 2026.”
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Today's inflation report, which showed the CPI rose 3.7% was the last reading on consumer prices ahead of Federal Reserve's Oct. 27-28 policy meeting. Fed Chairman Kevin Warsh is set to speak late Thursday New York time from the International Monetary Fund meetings in Bangkok.
Meanwhile, IMF head Kristalina Georgieva said US Treasury Secretary Scott Bessent's plan to grow the economy out of its mounting debt and fiscal deficit problems would not work quickenough. “The authorities very much rely on strong growth in the US,” Managing Director Kristalina Georgieva said Wednesday. “Growth, of course, helps but it cannot deliver fast enough the necessary adjustments.”
Speaking in Bangkok during the International Monetary Fund-World Bank annual meetings, she added,“Some measures would be necessary."
Bessent earlier said in recent months that the US will be able to change its debt and deficit trajectory through a reliance on strong economic growth.
“What is important is the debt-to-GDP, and we will start bending that curve and bringing it down,” Bessent said last week. “It could happen very quickly.”
He mentioned that continuing gross domestic product growth more than 3%, a target set to be hit for last quarter of the year, will ensure to achieve the goal.
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