Inflation jumps to 3.7%; Nasdaq drops 1.9% on Fed hike bets
Consumer prices rose 0.6% in September and 3.7% from a year earlier, led by a 9.1% jump in gasoline, the Labor Department said Wednesday. The hotter-than-expected report lifted bets on another Federal Reserve rate hike and sent the Nasdaq down 1.88%, its worst day since July, as AI and chip stocks sold off.
AI-assisted · US Brief desk · Sources listed below
What happened
The consumer price index rose a seasonally adjusted 0.6% in September after a 0.4% gain in August, the Bureau of Labor Statistics said Wednesday. Prices were up 3.7% from a year earlier, up from 3.4% in August. Gasoline rose 9.1% in the month and accounted for more than half of the increase. Core prices, which exclude food and energy, rose 0.3% for the month and 2.6% for the year, up from 2.4%.
Why it matters
Wage growth was running about 3% a year as of September, so prices are rising faster than paychecks, NBC News reported. A further Fed hike would raise costs on credit cards and car loans. NBC noted it is also the last CPI report before November's midterm elections, with early voting under way.
What’s next
The producer price index for September is due Thursday. The Fed's preferred gauge, the PCE price index, comes later this month. The Fed meets Oct. 27–28, and the October CPI report is set for Nov. 10.
More context
Market reaction: The Nasdaq Composite fell 1.88% to 26,692.87, its biggest daily drop since July 23, and the S&P 500 lost 1.11% to 7,718.94, Reuters reported. The Dow slipped 0.09% to 51,621.48. AI stocks sensitive to borrowing costs led the decline: Oracle lost 8.8%, CoreWeave 15% and Nebius 10%. Dell and Hewlett Packard Enterprise fell 11.4% and 8.2% after a Barclays downgrade. Bank of America fell 4.8% after setting aside $1.2 billion for regulatory fines. Apple rose 0.5% and closed above $5 trillion in market value for the first time.
The Fed angle: The Fed raised rates in September for the first time in more than three years, to a 3.75%–4% range, CNBC reported. This was the last CPI report before the Oct. 27–28 policy meeting under Chair Kevin Warsh. CME FedWatch odds of an October hike rose to 37% at the close from 22% on Tuesday, according to Reuters.
Key numbers: Economists surveyed by Dow Jones expected 3.6% annual inflation and 2.5% core, CNBC said, so both came in a tenth higher. Energy prices are up 20.4% over the past year, gasoline 34.2% and fuel oil 74.2%, according to the BLS. Food prices were flat in September, and grocery prices fell 0.1%. Airline fares are up 22.4% over the year.
How the White House answered: National Economic Council Director Kevin Hassett told Fox Business the top-line number was disappointing. He partly attributed it to attacks on Middle East energy sites and said "inside the top line there's a lot of good news." He added, "We really need to see the next month" before judging whether the Fed should act.
What remains unknown: Whether the Fed moves in October. CNBC put the odds of an Oct. 28 hike near 54% in the morning, and Reuters had them at 37% by the close. CNBC said the odds may be held down by the idea that the Fed will avoid a hike just before an election. Traders saw a better than 95% chance of at least one more hike by year-end, CNBC said.
Sources across the spectrum This story cites right-leaning and mainstream or left-leaning outlets. Every source is listed below.
6 listed sources
- U.S. Bureau of Labor Statistics, Consumer Price Index – September 2026, Oct. 14, 2026
- Reuters (Noel Randewich et al.), Nasdaq ends sharply lower as hot inflation data stirs rate-hike worries, Oct. 14, 2026 (syndicated copy)
- CNBC, Consumer prices rose 3.7% annually in September as gas prices skyrocket, Oct. 14, 2026
- CNBC, Fed may now have to hike twice or increase by a half point in December, traders bet, Oct. 14, 2026
- NBC News, Inflation jumps to 3.7% as gas and diesel prices squeeze consumers ahead of the midterms, Oct. 14, 2026
- Fox Business, White House economist Hassett says inflation masks a spending boom, Oct. 14, 2026
References listed by US Brief; a source count is not a verification score.
Editorial sourcing notes
CPI figures are from the Bureau of Labor Statistics September 2026 release. Forecasts are the Dow Jones economist survey as reported by CNBC. Index closes are Reuters' final figures; earlier preliminary prints were slightly different. Rate-hike odds come from CME's FedWatch tool and moved sharply during the day, so outlets quoted different numbers.
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