GLOBAL MARKETS-Dollar gains, Wall Street stocks fall after hot inflation data

The dollar rose while Wall Street stocks fell on Wednesday after data showed US consumer prices rose more than expected last ‌month, briefly reviving bets the Federal Reserve may raise interest rates, though a currency pullback later tempered those expectations. US Labor Department data showed the core consumer price index up 0.3% in September versus economist expectations for a rise of 0.2%. On an annual basis, core CPI, which strips out food and energy prices, ‌rose 2.6%, above forecasts for a rise of 2.5%, while the headline rate rose 3.7%, above estimates for a rise of 3.6%.

The dollar ‌rose 0.35% against a basket of currencies to its highest since April 2025, while US 2-year Treasury yields , which are most sensitive to shifts in expectations for inflation and monetary policy, rose 1.5 basis points on the day to 4.81%. "The reading was hotter than expected, not just with energy but elsewhere, suggesting higher tariffs and conflict-driven disruptions are bleeding into other ⁠categories," said ​Mark Hackett, chief market strategist at Nationwide. "Investors ⁠are coming to terms with 'higher-for-longer' inflation."

Money markets showed traders upped their bets on the chances of the Federal Reserve delivering another rate rise this month to around 33%, from closer ⁠to 20% prior to the data, while cementing the odds of an additional rise in December, according to LSEG data. The euro dropped 0.38% to $1.1155, while the pound fell 0.49% ​to $1.3187. The Japanese yen was at 158.31 per dollar.

STOCKS FALL On Wall Street, all three indexes finished lower with technology and communication services driving ⁠losses while healthcare, consumer staples and energy stocks ended higher.

The Dow Jones Industrial Average fell 0.09%, the S&P 500 fell 1.11% and the Nasdaq Composite fell 1.88%. More of Wall Street's big ⁠banks ​reported earnings, with Bank of America, which saw profits fall in the third quarter, and Morgan Stanley, which beat expectations for its third-quarter profit thanks to strong equity trading.

Europe's STOXX 600 pared some of the day's gains and finished up 0.43%, while the MSCI All-World index fell 0.87%. Sentiment was already ⁠fragile prior to the consumer data, given the renewed strength in oil prices following attacks on two vessels in the Strait of Hormuz and ⁠after Iranian officials told Reuters they were ⁠deploying new tactics to hit ships, raising the risk of fresh disruption to energy supplies.

Brent crude futures, which are around their highest in nearly two weeks, rose 0.35% to settle at $106.06 a barrel. Spot gold fell 1.45% ‌to $4,096.58 an ounce.