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  • US stocks plunged on Thursday, and then soared after September’s CPI report doubled expectations at 0.4% month-over-month.
  • The September inflation report poured cold water on hopes that the Fed will pivot away from its interest rate hikes.
  • Fed Fund Futures are now pricing in a 75 basis point rate hike in both November and December.

US stocks plunged on Thursday, and then soared after September’s CPI report showed inflation continues to hit levels not seen in four decades. 

The S&P 500 was down 2.4% as its low of the day, before it recovered all of those losses and surged as much as 2%. The reversal came after the S&P 500 tested 3,500, briefly hitting a low of 3,491. The 3,500 level represents a 50% retracement of the March 2020 low at about 2,200 and the January high of about 4,800.

Month-over-month inflation hit 0.4%, double the expectation for a rise of just 0.2%. CPI rose 8.2% year-over-year, which was above estimates for a rise of 8.1%. Even when excluding food and energy prices, CPI rose 0.6% month-over-month, which was ahead of estimates for a rise of 0.4%.

The hot CPI report erased all hopes that the Fed will soon pivot away from its aggressive rate hikes anytime soon. The Fed is now expected to hike interest rates 75 basis points in both November and December, according to the CME FedWatch Tool.

The shock CPI report erased early morning gains in the market, as the S&P 500 was briefly up about 1% after the UK government signaled a policy reversal of its proposed tax cut plans.

Here’s where US indexes stood at 11:52 a.m. ET on Thursday:

“In one line: Awful,” Pantheon Macro’s chief economist Ian Shepherdson told Insider. “Downward pressure on inflation is visible everywhere except in the inflation numbers.”

Here’s what else is happening this morning:

In commodities, bonds and crypto:

  • West Texas Intermediate crude oil rose 1.70% to $88.75 per barrel. Brent crude, oil’s international benchmark, jumped 1.74% to $94.06.
  • Gold fell 0.38% to $1,671.20 per ounce.
  • The yield on the 10-year Treasury jumped 5 basis points to 3.95%.
  • Bitcoin fell 0.61% to $18,972, while ether fell 2.25% to $1,257. 



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