Key Takeaways
- US Supercore CPI jumped to 0.511% in August, a significant acceleration from 0.189% in July, pushing the yearly rate to 3.022%.
- Market expectations for a Federal Reserve rate hike next week have surged to 90%, up from 70% prior to the hotter-than-expected inflation data.
- Core CPI (MoM) rose 0.3%, exceeding economist estimates of 0.2%, driven by persistent price pressures in the services sector.
- S&P 500 and Nasdaq 100 futures remain positive, gaining 1% and 0.7% respectively, as investors digest strong corporate earnings alongside the inflation data.
- Geopolitical tensions persist as Yemen’s Houthis announced that maritime navigation is safe for all vessels except those belonging to Saudi Arabia.
The U.S. Bureau of Labor Statistics released August inflation data today, revealing a complex picture of the American economy. While the headline Consumer Price Index (CPI) rose 0.4% month-over-month—matching estimates—the "Supercore" metric, which tracks services excluding shelter and energy, saw a sharp spike to 0.511%. This acceleration suggests that underlying inflationary pressures remain more stubborn than the Federal Reserve would prefer.
The immediate reaction in the fixed-income markets was a repricing of monetary policy expectations. Traders now see a 90% probability of a Fed rate hike at next week’s meeting, a steep increase from the 70% chance priced in earlier this morning. The Core CPI (YoY) landed at 2.4%, slightly lower than the previous 2.5%, but the monthly uptick in core prices has reignited concerns about a "higher-for-longer" interest rate environment.
Despite the inflationary headwinds, equity futures showed resilience during the pre-market session. Oracle (ORCL) shares surged 5.7% following an earnings beat and improved fiscal year guidance. Conversely, Adobe (ADBE) fell 4.3% after its fourth-quarter revenue outlook failed to meet analyst expectations. Retail favorite GameStop (GME) rose 4.2% on news that CEO Ryan Cohen purchased 1 million additional shares.
In the corporate M&A space, Copart (CPRT) announced an agreement to acquire ACV Auctions (ACVA) for $10.50 per share, causing ACVA stock to skyrocket 44.6%. Meanwhile, the consumer sector showed signs of cooling as Kroger (KR) lowered its fiscal year 2026 identical sales outlook, leading to a 2.6% decline in its share price.
On the international front, Germany reported a Current Account Balance of 21.15B EUR for July, outperforming the previous 18.9B EUR. In the Middle East, Houthi rebels in Yemen clarified their stance on Red Sea shipping, stating that all global shipping companies can navigate safely except for Saudi Arabian vessels, which remain under a previously announced ban. Simultaneously, Iran used the BRICS summit to propose a $10 billion joint reinsurance firm and urged the BRICS bank to increase infrastructure funding.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.