The Dow Jones Industrial Average surged more than 500 points today, buoyed by a drop in oil prices and the release of U.S. consumer price index data that matched analysts' expectations. As of 9:05 p.m. Thailand time, the Dow was up 584.01 points, or 1.12%, at 52,648.11. West Texas crude fell below 99 dollars per barrel and Brent crude fell below 104 dollars per barrel after the Financial Times reported, citing sources, that foreign ministers from Arab Gulf states and Iran are scheduled to meet on September 14 in Salalah, Oman, to discuss an interim agreement on regulating shipping through the Strait of Hormuz. It would be the first meeting of senior diplomats from the six member states of the Gulf Cooperation Council with Iran since the United States and Israel launched attacks on Iran on February 28. Meanwhile, the U.S. Labor Department reported that the headline CPI rose 3.4% year on year in August, in line with expectations, after also rising 3.4% in July, and rose 0.4% month on month, in line with expectations, after a 0.1% gain in July. Core CPI rose 2.4% year on year, in line with expectations, after rising 2.5% in July, but rose 0.3% month on month, above the expected 0.2%, after a 0.2% gain in July. However, investors increasingly expect the Federal Reserve to raise interest rates at next week's meeting. The CME Group's FedWatch Tool indicates that investors now assign an 85.8% probability to the Fed raising rates by 0.25% at its September 16 meeting, up from 72.4% yesterday, and a 14.2% probability that the Fed will hold rates at 3.50-3.75% at the September 16 meeting, down from 27.6% yesterday.
Investors now assign an 85.8% probability to a Fed rate hike on September 16, up from 72.4%, pushing the effective fed funds rate higher.
Rising Fed rate-hike odds lift the 10-year Treasury yield, which moves inversely to the bond price.
