Stock-market investors await CPI data for the next word on any Fed rate hike

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Vivien Lou Chen is a Markets Reporter for MarketWatch. You can follow her on Twitter @vivienlouchen.

Investors are turning their attention to September’s consumer price index report on Thursday for more clues about whether inflation is still too hot to put a decisive end to another Federal Reserve rate hike.

“We still see pressures on inflation on multiple fronts, especially now stemming from international uncertainty,” said economist Lauren Henderson of Stifel, Nicolaus & Co. in Chicago. Like economists polled by The Wall Street Journal, Stifel expects Thursday’s CPI report to show a 0.3% monthly increase in headline and core inflation for September, along with 3.6% and 4.1% year-over-year rates for each, respectively.

Then, the emergence of deadly conflict in the Middle East over the past weekend had traders and investors suddenly shifting course. They flocked to the safety of government debt on Tuesday when the cash market reopened, following Monday’s Columbus and Indigenous Peoples holiday in the U.S. A growing conviction that the Fed won’t likely raise rates again also helped drive Treasury yields sharply lower on Tuesday, sending U.S. stocks to a third day of gains.

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