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Core inflation rate held at 2.9% in August, as expected, Fed's gauge shows

1. Core inflation remains stable, suggesting potential Fed interest rate cuts. 2. Personal consumption expenditures rose 0.6%, indicating consumer spending strength. 3. Fed predicts two more rate cuts before year's end, supporting market optimism. 4. Tariffs have limited impact on consumer prices, easing inflation concerns. 5. Markets expect a rate cut in October, but December views are mixed.

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FAQ

Why Bullish?

The expectation of rate cuts typically supports stock prices, evident in previous rate cut cycles. Historical instances show stock market upswings following Fed easing.

How important is it?

The data reveals strong consumer spending, which positively influences S&P 500 earnings outlook. Investors likely view the Fed's approach favorably, impacting overall market sentiment.

Why Short Term?

The immediate market reaction aligns with anticipated October cuts, creating volatility leading up to the event. Previous rate cuts often show short-term market boosts.

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