GLOBAL MARKETS-Dollar gains, Wall Street stocks fall after hot inflation data
By Amanda Cooper and Chibuike Oguh
NEW YORK/LONDON, Oct 14 (Reuters) - The dollar rose while Wall Street stocks fell on Wednesday after data showed US consumer prices rose more than expected last month, briefly reviving bets the Federal Reserve may raise interest rates, though a currency pullback later tempered those expectations.
US Labor Department data showed the core consumer price index up 0.3% in September versus economist expectations for a rise of 0.2%. On an annual basis, core CPI, which strips out food and energy prices, rose 2.6%, above forecasts for a rise of 2.5%, while the headline rate rose 3.7%, above estimates for a rise of 3.6%.
The dollar rose 0.35% against a basket of currencies to its highest since April 2025, while US 2-year Treasury yields , which are most sensitive to shifts in expectations for inflation and monetary policy, rose 1.5 basis points on the day to 4.81%.
"The reading was hotter than expected, not just with energy but elsewhere, suggesting higher tariffs and conflict-driven disruptions are bleeding into other categories," said Mark Hackett, chief market strategist at Nationwide. "Investors are coming to terms with 'higher-for-longer' inflation."
Money markets showed traders upped their bets on the chances of the Federal Reserve delivering another rate rise this month to around 33%, from closer to 20% prior to the data , while cementing the odds of an additional rise in December, according to LSEG data.
The euro dropped 0.38% to $1.1155, while the pound fell 0.49% to $1.3187. The Japanese yen was at 158.31 per dollar.
STOCKS FALL
On Wall Street, all three indexes finished lower with technology and communication services driving losses while healthcare, consumer staples and energy stocks ended higher.
The Dow Jones Industrial Average .DJI fell 0.09%, the S&P 500 .SPX fell 1.11% and the Nasdaq Composite .IXIC fell 1.88%.
More of Wall Street's big banks reported earnings, with Bank of America, which saw profits fall in the third quarter, and Morgan Stanley MS.N, which beat expectations for its third-quarter profit thanks to strong equity trading.
Europe's STOXX 600 .STOXX pared some of the day's gains and finished up 0.43%, while the MSCI All-World index .MIWD00000PUS fell 0.87%.
Sentiment was already fragile prior to the consumer data, given the renewed strength in oil prices following attacks on two vessels in the Strait of Hormuz and after Iranian officials told Reuters they were deploying new tactics to hit ships, raising the risk of fresh disruption to energy supplies.
Brent crude futures , which are around their highest in nearly two weeks, rose 0.35% to settle at $106.06 a barrel.
Spot gold fell 1.45% to $4,096.58 an ounce.