### Market Recovery: A Day of Volatility Ends on a Positive Note for Nasdaq
Following a sharp decline at the onset of Wednesday’s trading session, stocks have seen a notable recovery by the end of the day. The key indices rebounded significantly from their initial lows, with the Nasdaq, heavily featuring tech stocks, making a pronounced move into positive territory.
Presently, performance among the major averages is mixed. The Dow Jones is down 180.87 points or 0.4%, standing at 40,556.09. Conversely, the Nasdaq has gained 137.74 points or 0.8%, reaching 17,163.62, while the S&P 500 has modestly risen by 1.49 points, or less than 0.1%, sitting at 5,497.01.
### Economic Data Impact
The initial downturn on Wall Street was triggered by the Labor Department's much-anticipated report on consumer price inflation for August. The findings revealed that while consumer prices increased as expected, core consumer prices—excluding food and energy—edged up more than anticipated.
Specifically, the Labor Department noted that the Consumer Price Index (CPI) rose by 0.2% in August, aligning with both the July increase and economists' predictions. However, core consumer prices climbed by 0.3% in August, following a 0.2% rise in July. Economists had forecasted another 0.2% increase.
This data sparked a significant sell-off as it diminished the prospects of a 50 basis point interest rate cut by the Federal Reserve. Nevertheless, the selling pressure has eased significantly over the session, as markets remain optimistic that the Fed will continue to lower interest rates in the coming months.
### Fed Rate Cut Projections
According to CME Group's FedWatch Tool, the likelihood of a half-point rate cut next week has decreased in light of the new data. That said, market sentiment still points towards interest rates being at least a full percentage point lower by year-end.
"Given the stickiness of services inflation, the Fed will likely cut by 25 basis points in the upcoming meeting and reserve the potential for more aggressive action later this year if we see further deterioration in the job market," suggested Jeffrey Roach, Chief Economist at LPL Financial.
### Sector Analysis
Despite the broader market recovery, interest rate-sensitive housing stocks remained notably weak, with the Philadelphia Housing Sector Index declining by 1.4%. Banking stocks also showed significant weakness, as evidenced by the 1.3% drop in the KBW Bank Index.
Oil producers and transport stocks continued to face challenges, while semiconductor stocks made a remarkable turnaround, driving the Philadelphia Semiconductor Index up by 2.1%.
### Global Markets and Bonds
In global markets, Asia-Pacific stocks fell predominantly during Wednesday's trading. Japan's Nikkei 225 dropped by 1.5%, while China's Shanghai Composite Index decreased by 0.8%.
European markets displayed mixed results. Germany's DAX Index rose by 0.4%, whereas France's CAC 40 dipped by 0.1%, and the U.K.'s FTSE 100 dropped by 0.2%.
In the bond market, U.S. Treasuries experienced fluctuations throughout the session. Currently, the yield on the benchmark ten-year note, which inversely correlates with its price, is up 2.6 basis points, reaching 3.670%.
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