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Dow Jones Plunges 570 Points from Highs Despite Softer Inflation Data
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CNBC TV18•01-10-2026, 05:07
Dow Jones Plunges 570 Points from Highs Despite Softer Inflation Data
- •Wall Street indices reversed sharply despite a softer-than-expected August inflation print, with the Dow Jones falling 450 points overnight and nearly 600 points from its daily high.
- •August's Personal Consumption Expenditure (PCE) inflation, the Fed's preferred gauge, rose 0.3% month-on-month, with the year-on-year figure at 3.4%, softer than the 3.7% projection.
- •The softer PCE data reduced the probability of a 25 basis point Fed rate hike in October to 38% from 70% just two days prior.
- •Despite positive economic data like resilient ADP Private Payrolls and revised Q2 GDP, bond markets sold off, pushing 30-year and 10-year yields higher.
- •Analysts anticipate a strong results season and the end of mid-term polls to help the market break out and move towards record highs.
Key Questions Answered
Despite a softer-than-expected August PCE inflation print, Wall Street reversed sharply because bond markets continued a heavy sell-off. The 30-year yield reached a new high of 5.63% and the 10-year yield moved toward 5.3%, driven by resilient economic data, higher government debt, and continued corporate supply.
The August PCE inflation figures brought down the probability of the US Federal Reserve raising interest rates by 25 basis points in October to 38%, dropping from 70% just two days prior.
Along with the inflation data, the ADP Private Payrolls report showed the private sector added 90,000 jobs in September, the Q2 GDP was revised higher to 2.2% in the third estimate, and consumer spending rose at its fastest pace in a year.
