Wall Street opens lower as odds of December rate hike rise

The Dow Jones Industrial Average fell 18.38 points, or 0.08 per cent, to 22,139.8. The S&P 500 lost 4.93 points, or 0.19 per cent, to 2,493.44.
The Dow Jones Industrial Average fell 18.38 points, or 0.08 per cent, to 22,139.8. The S&P 500 lost 4.93 points, or 0.19 per cent, to 2,493.44.PHOTO: AFP

NEW YORK (REUTERS) - Wall Street's three major indexes opened lower on Thursday (Sept 14), shying away from their record high closes, as an uptick in consumer prices inflation boosted the odds of another interest rate hike this year.

A Labor Department report showed consumer price index (CPI) rose more than expected last month and the gain was the largest in seven months, lifting the year-on-year increase to 1.9 per cent from 1.7 per cent in July.

Despite the uptick, both CPI and personal consumption expenditures, the Federal Reserve's preferred inflation measure, remain stuck below the central bank's 2 per cent target. "I don't think they should raise rates in December, but they will, in order to counteract any kind of slowdown in the overall economy," said Robert Pavlik, chief market strategist at Boston Private Wealth.

After the data was released, the odds of a hike in December rose to top 50 per cent for the first time since July, from 41.3 per cent, according to CME Group's FedWatch tool. The CPI data is the last to be released before the Fed's Sept. 19-20 policy meeting, where it is expected to outline a program to start offloading its US$4.2 trillion (S$5.6 trillion) balance sheet.

At 9:38 a.m. ET (9:38 p.m. Singapore time), the Dow Jones Industrial Average was down 12.53 points, or 0.06 per cent, at 22,145.65 and the S&P 500 was down 6.62 points, or 0.26 per cent, at 2,491.75.

The Nasdaq Composite was down 33.55 points, or 0.52 per cent, at 6,426.64. Six of the 11 major S&P sectors were down, with a 0.5 per cent decline in technology index on top of the list. Facebook's 1.2 per cent fall dragged on the S&P and the Nasdaq the most.

The gainers were led by the energy index's 0.6 per cent rise after US crude prices hit US$50 per barrel after forecasts for stronger demand by the International Energy Agency. Apple's shares fell 0.46 per cent, staying under pressure on concerns about the pricing and delayed availability of the newly launched iPhone X.

Declining issues outnumbered advancers on the NYSE by 1,577 to 937. On the Nasdaq, 1,433 issues fell and 783 advanced.