Stocks Fall As Inflation Data Chills Rate-Cut Excitement, Chipmakers, Solar Sector Soar On Harris-Linked Boost: What's Driving Markets Wednesday?

Wall Street witnessed a broad sell-off on Wednesday, except for the tech sector, as investor optimism over disinflation progress cooled following a mixed August inflation report.

The Consumer Price Index (CPI) rose 2.5% year-over-year, slightly below the 2.6% estimate and down from July’s 2.9%, marking the slowest pace of inflation since February 2021. The bulk of this decline came from energy-related categories.

However, core inflation, excluding the more volatile components like food and energy, rose 0.3% month-over-month, surpassing expectations of 0.2%. The annual core CPI remained at 3.2%, reflecting persistent inflation in service-related sectors.

A key driver of inflation continues to be shelter costs, which rose 0.5% from the previous month—the sharpest increase since January, and account for nearly a third of the total CPI.

The report dashed hopes for a Federal Reserve rate cut in the upcoming meeting. Market expectations for a 50-basis-point cut plummeted to just 13%, down from 34% the day before, as per CME FedWatch.

The inflation data gave the U.S. dollar a lift and nudged Treasury ...