Dow Jones Defies Inflation Fears with Stunning Rally

Wall Street just delivered a masterclass in ignoring bad news. While inflation numbers came in hotter than expected, the Dow Jones didn't just hold its ground—it surged.

The Resilience Playbook

Traders brushed off concerning CPI data like it was yesterday's news. Instead of panic selling, they piled into blue-chips, pushing the index to impressive gains. The message from the floor? The market's betting the Fed's got this under control.

Behind the Numbers Game

Institutional money moved with conviction, not caution. Hedge funds and ETFs drove the rally, showcasing that sometimes the smart money plays a longer game than headline economics would suggest.

Because nothing says 'healthy economy' like celebrating overpriced assets while consumers pay more for groceries—classic Wall Street alchemy at work.

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August’s Consumer Price Index (CPI) grew by 0.4% month-over-month, above the consensus estimate of 0.3% and registering the highest growth since January. CPI grew by 2.9% on an annual basis, in line with the estimate and rising from 2.7% in July.

Core CPI Holds Steady as Inflation Remains Above Fed’s Target

However, Core CPI was tamer, remaining unchanged from 0.3% in July and matching the estimate. It notched 2.9% year-over-year growth, also matching the estimate but rising from 2.7% in July. Core CPI excludes volatile food and energy items.

The data points suggest that price increases from the TRUMP administration’s tariffs could be making their way to consumers. In addition, inflation remains above the Fed’s long-term inflation target of 2.0%. That hasn’t affected the odds of a rate cut at the September 16-17 Federal Open Market Committee (FOMC) meeting, which remain at 100%, according to CME’s FedWatch tool.