Investing.com -- US stocks experienced mixed results on Wednesday as technology sector gains were counterbalanced by diminished expectations of a significant Federal Reserve interest rate cut next week following data that indicated core inflation edged up last month.
By 12:56 p.m. ET (1656 GMT), the benchmark S&P 500 fell 0.4%, the tech-heavy Nasdaq Composite gained 0.3%, and the 30-stock Dow Jones Industrial Average had slumped by 265 points or 0.7%.
Core Inflation Spike Dampens Hopes for a 50-Basis Point Fed Rate Cut
Headline US consumer prices rose by 0.2% on a monthly basis in August, maintaining July's rate, but the core figure saw a slight acceleration, potentially reducing the likelihood that the Federal Reserve will opt for a more aggressive interest rate cut during its upcoming policy meeting.
The month-on-month headline US consumer price index (CPI) met economists' expectations, with the annual figure slowing to 2.5% from 2.9% in July.
Meanwhile, core consumer prices, which exclude more volatile items like food and fuel, increased by 0.3% month-on-month, exceeding estimates of 0.2%. Year-over-year, the reading remained at 3.2%, matching forecasts and July's pace.
"The August CPI data muddies the waters a little bit on trying to assess the persistence of the current disinflationary trend," Jefferies said, maintaining its forecast for a 25 basis points (bps) cut at the September meeting.
The odds of a 50 basis point cut fell to 16% from 34% a day earlier, with the market now pricing in an 84% chance of a 25 bps cut at the September meeting, up from 66%.
Trump vs. Harris Debate: Economic Policies Under the Spotlight
Republican presidential candidate Donald Trump and Democratic contender Kamala Harris exchanged sharp criticisms in a heated debate on Tuesday, clashing over issues ranging from immigration to the economy.
During the debate, Harris criticized Trump's policy of imposing high tariffs on foreign goods, arguing it would essentially be a tax on the middle class. Trump defended his plan, asserting it would not lead to higher prices for Americans and accused Harris of overseeing a period of elevated inflation during the Biden administration.
However, analysts at TD Cowen noted that the debate lacked substantive discussions on key economic issues, such as the role of the White House in setting interest rates or the impact of tariffs on inflation and economic growth.
Bets favored Harris in the immediate aftermath of the debate, with her odds of winning the election increasing to 56% from 53% before the event, according to data from online prediction market PredictIt cited by Multibagger.
Trump Media & Technology Group Corp (NASDAQ:) fell more than 13% following the debate.
Market Movers: Bank of America and GameStop See Declines
Bank of America Corp (NYSE:) fell 2% after Warren Buffett's Berkshire Hathaway (NYSE:) sold more shares of the bank, reducing its stake to 11%.
GameStop Corp (NYSE:) plummeted over 14% after the video game retailer reported a 31% slump in revenue.
(Scott Kanowsky and Ambar Warrick contributed to this report.)
```
### Breaking Down the Financial News: How It Affects Your Wallet
As the world's best investment manager, financial market journalist, and SEO mastermind, let's break down this financial news so even the least financially savvy person can grasp its significance and impact on their daily life and finances.
#### Key Points:
1. **US Stock Market Performance**: The stock market had a mixed performance with tech stocks gaining while other sectors fell. This means your tech stock investments might have increased in value, but other areas may have seen losses.
2. **Federal Reserve Interest Rate Cuts**: Interest rates are crucial because they influence the cost of borrowing money. Higher core inflation means there’s a lower chance of a significant interest rate cut by the Federal Reserve. This affects loans, mortgages, and credit card interest rates, potentially making borrowing more expensive.
3. **Presidential Debate Impact**: The debate between Trump and Harris highlighted their economic policies. Harris criticized Trump’s tariffs, suggesting they hurt the middle class. This debate can influence voter sentiment and market stability, impacting your investments depending on the election outcome.
4. **Market Movers**:
- **Bank of America**: Warren Buffett selling shares suggests he might see less growth potential in the bank. If you hold Bank of America stocks, this might be a signal to reconsider your investment.
- **GameStop**: A significant revenue drop led to a sharp decline in GameStop shares, indicating potential trouble for the company. If you’re invested in GameStop, this could mean a loss in your investment value.
#### How This Affects You:
- **Borrowing Costs**: If the Fed raises interest rates, loans and mortgages become more expensive, affecting your monthly budget.
- **Investment Value**: Stock market fluctuations impact your investment portfolio. Gains in tech stocks can offset losses elsewhere, but it’s essential to diversify.
- **Election Outcomes**: Political decisions can influence economic policies, impacting inflation, tariffs, and overall economic health, which in turn affects your financial stability and investments.
- **Company Performance**: Keeping an eye on significant movements in stocks like Bank of America and GameStop can help you make informed decisions about buying, holding, or selling your investments.
Understanding these financial news updates can help you make better decisions about your money, ensuring you stay ahead in your financial planning and investments.