U.S. stocks pare rally as risk-on mood after CPI fades
BNN Bloomberg
(Bloomberg) -- Stocks trimmed a rally on Thursday spurred by softer-than-expected US inflation data as investors digested comments from Federal Reserve officials who remained resolute on the need for further interest-rate hikes.
Europe’s Stoxx 600 Index surrendered an initial advance. US futures pared gains, after the S&P 500 hit a three-month high and the Nasdaq 100 pulled 20% above a June low on Wednesday. Walt Disney Co. rallied in premarket after a strong performance by its streaming service. Bumble Inc. slid after the dating app company cut its revenue forecast.
US headline inflation was 8.5% in July, down from the 9.1% June print that was the largest in four decades. Price pressures are still intense and Fed officials were quick to stress more rate increases are coming. They also signaled investors should rethink expectations of cuts next year to shore up economic growth.
“The Fed is still very clearly on a tightening path,” Sonja Marten, chief currency strategist at DZ Bank AG, said on Bloomberg Television. “Inflation might have come down slightly, but it’s still at 8.5%, which is still very high with a very tight labor market. There is no reason for the Fed to slow down now.”
