US open: Stocks lower following hotter-than-expected CPI reading

dl exchange place wall st street pl new york city nyc ny nyse stock exchange dow jones sp nasdaq finance dollar dollars us usa united states of america — Exchange PlaceSharecast photo / Josh White

Wall Street stocks were sharply lower in the red early on Tuesday as market participants digested August's hotter-than-expected CPI reading and its potential implications for the Federal Reserve.

As of 1515 BST, the Dow Jones Industrial Average was down 1.73% at 31,821.78, while the S&P 500 was 2.14% weaker at 4,022.38 and the Nasdaq Composite came out the gate 2.92% softer at 11,907.86.

The Dow opened 559.56 points lower on Tuesday, easily erasing gains recorded in the previous session.

Tuesday's primary focus was news that US consumer price inflation slowed in August but was still above expectations, according to the Labor Department, fuelling expectations of another big rate hike from the Federal Reserve.

Inflation eased to 8.3% on the year, up from 8.5% in July, but came in above expectations of 8.1%. On a monthly basis, consumer price inflation rose 0.1%, compared to a flat reading in July. Meanwhile, core inflation - which strips out food and energy - increased to 6.3% in August from 5.9% a month earlier.

Treasury yields surged on the news, with the yield on the benchmark 10-year note up more than 11 basis points at 3.436%, while its 2-year counterpart was up nearly 17 basis points at 3.746%.

Talk of a rail strike in the US was also drawing an amount of investor attention at the open, with fears that any walkout could put further pressure on already strained supply chains in the coming day, and cost the economy roughly $2.0bn every day, disrupt the retail industry, and weigh on retail giants and logistics companies' profit expectations.

Elsewhere on the macro front, the National Federation of Independent Business' small business optimism index increased for a second month In August, rising to 91.8 from 89.9 in July, with falling energy prices offering some relief. The percentage of business owners anticipating improved business conditions over the next six months increased 10 points to -42%.

Still to come, the White House's monthly budget statement for August will be published at 1900 BST.

No major corporate earnings were slated for release on Tuesday.

Reporting by Iain Gilbert at Sharecast.com

Dow Jones - Risers

Dowdupont Inc. (DWDP) $0.00 0.00%
Honeywell International Inc. (HON) $0.00 0.00%
Procter & Gamble Co. (PG) $140.60 -0.35%
Walmart Inc. (WMT) $137.32 -0.54%
Verizon Communications Inc. (VZ) $42.49 -0.62%
Travelers Company Inc. (TRV) $164.20 -0.68%
Chevron Corp. (CVX) $161.24 -0.78%
McDonald's Corp. (MCD) $258.30 -0.80%
International Business Machines Corporation (CDI) (IBM) $129.43 -0.95%
Merck & Co. Inc. (MRK) $87.31 -0.96%