Stock Market Today: Stocks Stagger After CPI but Rebound to Post Gains
A mixed CPI report had traders recalibrating their rate-cut bets.
 
 
Joey Solitro
Stocks sold off sharply in early trading after a mixed August inflation report appeared to take a jumbo-sized rate cut off the table. But a rally in mega-cap tech names helped equities rebound by session's end.
Wednesday got off to an anxious start as traders and investors were particularly keen to see the August Consumer Price Index (CPI), which was released before the opening bell.
Market participants expect the Federal Open Market Committee (FOMC) to bring interest rates down from a 23-year high at the next Fed meeting. The question is whether the central bank will reduce the short-term federal funds rate by 25 basis points (a quarter of a percentage point) or 50 basis points (0.50%).
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
 
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
After Wednesday's econ news, a quarter-point cut is the odds-on favorite. August CPI increased 0.2% on a monthly basis, according to the Bureau of Labor Statistics, which matched economists' estimates. However, core CPI, which excludes volatile food and energy costs and is considered to be a better indicator of future prices, rose 0.3%. That topped expectations for a 0.2% increase and made markets somewhat uneasy.
"The economy is in the driver's seat, not the Fed," wrote Scott Helfstein, head of investment strategy at Global X. "That is a good thing. Stabilizing prices, solid market and strong corporate performance set the stage for a further market advance as the Fed moves to lower rates."
Helfstein added that a 25 basis point rate cut in September "is the most likely outcome."
By session's end, interest rate traders assigned an 87% probability to the central bank cutting the fed funds rate by a quarter-point at its next confab, up from 66% a day ago, according to CME Group's FedWatch Tool. Odds of a half-point cut fell to 13% from 34% the prior day.
"Equity players pressed sell following the CPI release, because they are worried that the Fed may be too late in providing relief," writes José Torres, senior economist at Interactive Brokers. "Still, stock bulls should favor a slow and controlled vertical walk down the monetary policy stairs rather than a speedy and turbulent roll south to lower stories."
The bottom line? Anxious recalibrations of rate-cut bets sparked a rally in tech and consumer discretionary stocks, while consumer staples, energy and financials sold off. At the closing bell, the blue chip Dow Jones Industrial Average was up 0.3% at 40,861, while the broader S&P 500 gained 1.1% to 5,554. The tech-heavy Nasdaq Composite rallied 2.2% to end at 17,395.
Stocks on the move
Bank of America (BAC) stock slipped 0.7% after Warren Buffett's Berkshire Hathaway (BRK.B) disclosed another large sale of its position in the banking giant.
Regulatory filings showed Berkshire Hathaway sold about 5.8 million Bank of America shares, with the selling price ranging between $39.29 and $39.67 per share. The selling started on September 6 and ran through September 10.
All told, Berkshire Hathaway sold about 174.7 million shares of BAC stock over that time frame for roughly $7.2 billion, bringing its holding to 858.2 million shares. This knocks Bank of America down to the third-largest position in the Berkshire Hathaway equity portfolio, with the financial stock now perched behind Apple (AAPL) and American Express (AXP). Prior to the stock sales, Bank of America was Buffett's second-largest holding.
Dave & Buster's Entertainment (PLAY) rose 4.7% after the restaurant and gaming company reported mixed earnings results for its second quarter though it achieved positive growth on both the top and bottom lines.
Dave & Buster's shares are down more than 45% for the year to date, but Wall Street is bullish on the consumer discretionary stock.
According to S&P Global Market Intelligence, the average analyst target price for PLAY is $52.71, giving shares implied upside of nearly 80% to current levels. Additionally, the consensus recommendation is Buy.
With sales in decline, GameStop sells more shares
GameStop (GME) stock plunged 12% after the video game retailer reported mixed results for its second quarter … and disclosed an at-the-market offering of up to 20 million shares of its common stock.
When a company announces a stock offering, it often leads to a decline in its share price over concerns of dilution. A stock offering increases the number of shares available in the market and reduces the ownership percentage of existing shareholders. The dilution also negatively impacts a company's earnings per share since there are more shares outstanding.
A stock offering can also cause concern because it shows that the company needs additional capital and is willing to dilute existing shareholders to raise it.
GameStop also announced an acceleration to its store closure plans.
Related content
- Stocks With the Highest Dividend Yields in the S&P 500
- Analysts' Top S&P 500 Stocks to Buy Now
- Are Palantir and Dell Buys on Being Added to the S&P 500?
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Dan Burrows is Kiplinger's senior investing writer, having joined the publication full time in 2016.
A long-time financial journalist, Dan is a veteran of MarketWatch, CBS MoneyWatch, SmartMoney, InvestorPlace, DailyFinance and other tier 1 national publications. He has written for The Wall Street Journal, Bloomberg and Consumer Reports and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among many other outlets. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange.
Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.
In his current role at Kiplinger, Dan writes about markets and macroeconomics.
Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.
Disclosure: Dan does not trade individual stocks or securities. He is eternally long the U.S equity market, primarily through tax-advantaged accounts.
- Joey SolitroContributor
- 
 I Just Paid Off My Car. Can I Downgrade My Car Insurance Now? I Just Paid Off My Car. Can I Downgrade My Car Insurance Now?You've gotten rid of that car payment. Can you save even more by downgrading your car insurance? Here's what to consider. 
- 
 Is Wireless Home Internet Right for You? Is Wireless Home Internet Right for You?T-Mobile’s 5G home internet offers flexibility, simplicity and potential savings but is it a replacement for cable or fiber? 
- 
 Are You Retired? Here's How to Drop the Guilt and Spend Your Nest Egg Are You Retired? Here's How to Drop the Guilt and Spend Your Nest EggTransitioning from a lifetime of diligent saving to enjoying your wealth in retirement tends to be riddled with guilt, but it doesn't have to be that way. 
- 
 Government Shutdown Freezes National Flood Insurance Program: What Homeowners and Buyers Need to Know Government Shutdown Freezes National Flood Insurance Program: What Homeowners and Buyers Need to KnowFEMA's National Flood Insurance Program is unavailable for new customers, increased coverage or renewals during the government shutdown. 
- 
 Separating the Pros From the Pretenders: This Is How to Tell if You Have a Great Adviser Separating the Pros From the Pretenders: This Is How to Tell if You Have a Great AdviserDo you leave meetings with your financial adviser feeling as though you've been bulldozed into decisions or you're unsure of what you're paying for? 
- 
 What Netflix Stock's 10-for-1 Split Means for Investors What Netflix Stock's 10-for-1 Split Means for InvestorsNetflix announced its long-awaited stock split after Thursday's close. NFLX will start trading on a split-adjusted basis ahead of the November 17 open. 
- 
 Stocks Sink with Meta, Microsoft: Stock Market Today Stocks Sink with Meta, Microsoft: Stock Market TodayAlphabet was a bright light among the Magnificent 7 stocks today after the Google parent's quarterly revenue topped $100 billion for the first time. 
- 
 Five Downsides of Dividend Investing for Retirees, From a Financial Planner Five Downsides of Dividend Investing for Retirees, From a Financial PlannerCan you rely on dividend-paying stocks for retirement income? You'd have to be extremely wealthy — and even then, the downsides could be considerable. 
- 
 Dow, S&P 500 Slip on December Rate Cut Worries, Nvidia Boosts Nasdaq: Stock Market Today Dow, S&P 500 Slip on December Rate Cut Worries, Nvidia Boosts Nasdaq: Stock Market TodayNvidia became the first company ever to boast a $5 trillion market cap, but it wasn't enough to lift the Dow and the S&P 500. 
- 
 I'm a CPA: Control These Three Levers to Keep Your Retirement on Track I'm a CPA: Control These Three Levers to Keep Your Retirement on TrackThink of investing in terms of time, savings and risk. By carefully monitoring all three, you'll keep your retirement plans heading in the right direction.