NEW YORK/LONDON, Oct 14 (Reuters) - The dollar rose while Wall Street stocks fell on Wednesday after data showed US consumer prices rose more than expected last month, reinforcing expectations the Federal Reserve may raise interest rates as soon as this month.
US Labor Department data showed the core consumer price index up 0.3% in September versus economist expectations for a rise of 0.2%. On an annual basis, core CPI, which strips out food and energy prices, rose 2.6%, above forecasts for a rise of 2.5%, while the headline rate rose 3.7%, above estimates for a rise of 3.6%.
The dollar rose 0.36% against a basket of currencies to its highest since April 2025, while US 2-year Treasury yields, which are most sensitive to shifts in expectations for inflation and monetary policy, leapt 0.23 basis point on the day to 4.87%.
"The reading was hotter than expected, not just with energy but elsewhere, suggesting higher tariffs and conflict-driven disruptions are bleeding into other categories," said Mark Hackett, chief market strategist at Nationwide. "Investors are coming to terms with 'higher-for-longer' inflation."
Money markets showed traders upped their bets on the chances of the Federal Reserve delivering another rate rise this month to around 41%, from closer to 20% prior to the data, while cementing the odds of an additional rise in December, according to LSEG data.