(Updates with index/price moves, macroeconomic data and geopolitical news from the first paragraph.)
US equity indexes fell after a hotter-than-expected inflation report, especially in core, boosted the odds of three interest-rate increases within six months.
The Nasdaq Composite dropped 1.3% to 26,850.8, and the S&P 500 slid 0.9% to 7,734.7 after midday Wednesday. The Dow Jones Industrial Average declined 0.1% to 51,616.7.
The consumer price index jumped 0.6% in September, as expected in a Bloomberg-compiled poll, from 0.4% in August, according to the Bureau of Labor Statistics. Core CPI climbed 0.3%, above the 0.2% consensus but in line with August. Overall and core CPI year-over-year accelerated to 3.7% and 2.6%, respectively, from 3.4% and 2.4%, and beat market expectations.
The CME FedWatch tool showed that the probability of the Federal Reserve lifting its target rate by 25 basis points in October almost doubled to 44% on Wednesday afternoon. The market now sees a 39% likelihood that the Fed will raise its target rate by another 25 basis points in December, versus 19% a day ago. It assigns a 39% probability of another move of the same magnitude in March to the 4.5% to 4.75% range, up from 30% a day earlier, implying three rate increases by the end of Q1.
Most US Treasury yields jumped, with the two-year rising 6.6 basis points to 4.86%. The 10-year yield advanced 1.9 basis points to 5.24%.
The Iran-aligned militant group Houthis vowed to press on with attacks on airports and oil facilities in Saudi Arabia, a day after a strike that sources said caused extensive damage to the headquarters of oil giant Saudi Aramco, Reuters reported.
The front-month US West Texas Intermediate crude oil contract advanced 1% to $95.07 per barrel, and global benchmark Brent edged up 0.2% to $105.85 per barrel.
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