Celebratory Fireworks on Rate Cut Expectations… U.S. Three Major Indexes All 'Record Highs' [New York Stock Market Briefing]

August CPI up 2.9% … 'In line with expectations'

All three major U.S. stock indexes reached record highs. August consumer price index (CPI) came in line with market expectations, boosting hopes for interest rate cuts.

On the 11th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 46,108, up 617.08 points (1.36%) from the previous session. The Standard & Poor's (S&P) 500 index closed at 6587.47, up 55.43 points (0.85%) from the previous session, and the Nasdaq index closed at 22,043.07, up 157.01 points (0.72%). All three major stock indexes closed at record highs.

The U.S. Department of Labor said that August U.S. consumer price index (CPI) rose 2.9% year-on-year. It was slightly higher than the previous month (2.7%) but matched market estimates. The month-on-month increase was estimated at 0.4%, slightly higher than the estimate (0.3%). Food prices rising 0.5% over the month drove the inflation trend.

Core CPI, excluding the volatile energy and food components, rose 3.1% year-on-year. It was the same level as in July. Markets had raised concerns that the Trump administration's high tariff policy would push up prices.

Labor market indicators showed a worsening trend. Initial jobless claims for the week of Aug. 31–Sept. 6 rose by 27,000 to 263,000, the highest in about four years.

However, as the August CPI remained within the expected range, financial markets showed signs of relief. Attention shifted from inflation to economic slowdown, and expectations grew that the U.S. central bank (Fed)'s policy path would not be reversed.

Bets that the pace of rate cuts would accelerate due to worsening employment strengthened. Jay Woods, chief market strategist at Freedom Capital Markets, said, "A 0.25% percentage-point cut is a warm-up, and considering unemployment data, a 0.5% percentage-point cut is still on the table."

According to the CME FedWatch tool, the probability in federal funds futures that the policy rate will be cut by 75bp (1bp=0.01% point) by December was reflected at 78.73%. It rose nearly 10 percentage points from 68.1% near the close of trading.

Among mega tech companies with market capitalizations over $1 trillion, Apple rose more than 1% and Tesla jumped more than 6%. Oracle, which had rocketed the day before and quickly approached a $1 trillion market cap, fell more than 6% that day.

Microsoft (0.13%) and Alphabet (0.51%) rose, but Amazon (-0.16%) and Nvidia (-0.08%) closed lower. Micron rose 7.55%. Investor sentiment improved after Citibank raised its target price.

Warner Bros.' shares rose 29%. News circulated that Paramount Skydance is preparing to acquire Warner Bros. Discovery. Paramount's shares also surged 16%.

Reporter Jin Young-gi, Hankyung.com young71@hankyung.com