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S&P 500 Futures Rise as Cool PCE Cuts Fed Hike Odds to 35%

U.S. Bureau of Economic Analysis2 min read6 sources

Why is the S&P 500 up today?

S&P 500 (SPX) futures rose on Wednesday, with the index up 0.5% near 7,713, after PCE inflation cooled to 3.4% versus 3.7% forecast, cutting October Fed hike odds to about 35%.

Key numbers

PCE inflation (year over year)3.4%vs 3.7% forecast
Core PCE (year over year)3.0%vs 3.3% forecast
October Fed hike odds~35%from ~70% last week; CME 34.9% [3], swaps 37% [2]
S&P 5007,712.60+0.54%
2-year Treasury yield-4 basis pointsafter PCE release
Fed funds target range3.75%-4.00%raised in September

What happened

S&P 500 (SPX) futures rose on Wednesday, with the index up 0.5% near 7,713, after PCE inflation cooled to 3.4% versus 3.7% forecast, cutting October Fed hike odds to about 35%. PCE is the price measure the Fed, the US central bank, watches most closely. It rose 3.4% in August from a year earlier, down from 3.7% in July. Core prices, which leave out food and energy, rose 3.0% against 3.3% expected. Traders now see about a 35% chance of a rate increase in October, down from roughly 70% a week ago.

Why it matters

The S&P 500 rose because cooler inflation lowers the odds that the Fed will raise interest rates again next month. The Fed lifted rates to 3.75%-4% in September, its first increase since 2023, and higher rates make borrowing costlier for homes, cars and companies. Inflation is still 3.4%, well above the Fed's 2% goal, so the rate debate is not over.

Who this affects

Marketbullish
Medium impact
Stock investors gain as fears of another rate hike ease.
Companybullish
Low impact
S&P 500 companies that borrow benefit from lower rate worries.
Competitorsbullish
Low impact
Short-term bond yields and the dollar slipped, easing pressure on borrowers.
Industrymixed
Low impact
Tech and rate-sensitive stocks gain, but inflation remains high.

S&P 500 vs Nasdaq Composite, Dow Jones, Russell 2000

S&P 500SPX7,712.60+0.54%
Nasdaq CompositeCOMP27,047.93+0.93%
Dow Jones Industrial AverageDJI51,389.92+0.08%
Russell 2000RUT2,814.51+0.23%

As of 2026-09-30

How we got here

  1. June PCE inflation eased to 3.7% from 4.1% in May as energy prices fell.

  2. July PCE inflation held at 3.7%, 0.1 point above forecast.

  3. Fed raises rates to 3.75%-4%, its first hike since 2023.

  4. August PCE inflation comes in at 3.4% against 3.7% forecast; hike odds fall.

What to watch

  • Fed's October meeting, where officials decide whether to raise rates again.2026-10
  • Next inflation and jobs reports; December hike odds are still near 60%.Q4 2026

Educational content only. Not investment advice.

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