US close: Stocks mixed after muted reaction to CPI figures

US stocks finished mixed on Wednesday despite an in-line inflation report which cemented expectations that the Federal Reserve will keep monetary policy unchanged when it meets next week.

Markets were struggling for direction for most of the session after a largely muted reaction to the consumer price index (CPI) release for August.

Andrew Hunter, deputy chief US economist at Oxford Economics, said: "Overall, there is nothing here to change the Fed’s plans to hold interest rates unchanged at next week’s FOMC meeting."

The Dow finished 0.2% lower at 34,576, the S&P 500 rose 0.1% to 4,467, while the Nasdaq gained 0.3% to 13,814.

According to the Department of Labor, consumer prices rose 0.6% during the month of August, in line with expectations but up sharply from the 0.2% growth registered in July and the highest rate of growth in over a year.

Compared with last August, inflation picked up to 3.7% in August, from 3.2% in July, and slightly ahead of the 3.6% increase expected by economists. However, at the core level, which excludes more volatile items like food and energy, the annual rate of growth eased from 4.7% to 4.3% – meeting the consensus forecast.

Investors will now be looking ahead to the Federal Open Market Committee meeting taking place next Wednesday evening.

"We still expect weaker economic growth and a continued normalisation in the labour market to help drive a sharper fall in core inflation over the next 12 months than most others expect," Hunter said.

In other news, Arm is expected to set its share price at $52 when it floats on the Nadsaq on Thursday morning, valuing the British chip designer at $55.5bn. Owner SoftBank is thought to raise around $5bn from the IPO, according to reports.

Stock movers

Apple fell 1% after unveiling an array of new products during its annual marketing event, Wanderlust, on Tuesday. Among those were the iPhone 15, the latest Apple Watch, and new versions of AirPods. In a significant pricing move, Apple announced an increase in the price of its premium iPhone, which could raise the average cost of the device beyond the $1,000 mark.

Apple shares had been under pressure over the past week on reports that China is banning government officials and state agencies from using iPhones at work. However, Beijing came out on Wednesday to confirm it hadn't released an official regulations on the use of foreign devices.

Citigroup rose after the bank unveiled plans to simplify its management structure and prevent overlapping roles. "We need a structure with fewer layers and clearer, more direct lines of decision making," said chief executive Jane Fraser in a note to employees.

Pharma giant Moderna was also in favour after its mRNA-1010 flu vaccine met its primary endpoint in a Phase 3 trial. Chief executive Stéphane Bancel said: “With today’s positive Phase 3 flu results, along with previous results in Covid and RSV, we are now three for three on advancing respiratory disease programs to positive Phase 3 data."

Moderna also announced that it estimates making $10-15bn in additional annual sales by 2028 by releasing new products in the oncology, rare and latent diseases categories.