Accelerating Consumer Inflation Complicates Fed's Balancing Act

Barry Adams
11 Sep, 2025
New York City

Wall Street indexes flatlined on Thursday, and investors reviewed the latest update on consumer inflation data.

The S&P 500 index edged up 0.1%, and the tech-heavy Nasdaq Composite inched higher a fraction. 

Both benchmark indexes closed at new record highs on Wednesday, after Oracle's growth outlook for its cloud business surprised investors. 

Overall consumer price inflation accelerated to 2.9% in August from 2.7% in the previous month, the Bureau of Labor Statistics reported on Thursday. 

The core rate of inflation, which excludes volatile food and energy prices, held steady at 3.3% in August. 

Producer price inflation in August slowed to 2.6% from the downwardly revised 3.1% in the previous month, the Bureau of Labor Statistics reported on Wednesday.

While net job gains are rapidly cooling over the last three months, consumer prices are still rising, and inflation is at a level above the Fed's target rate of 2%. 

The Federal Reserve is widely anticipated to cut rates by at least 25 basis points at the end of the next meeting on September 18, but a minority of investors are holding out for a larger rate cut of 50 basis points. 

Moreover, the sharp escalation in import taxes has so far not flowed through the economy, and businesses are not increasing payrolls amid lingering macroeconomic uncertainties.

 

ECB Holds Rates Steady

The European Central Bank left its key lending rates unrevised for the second consecutive meeting as inflation hovers near the target rate and the economy struggles to expand. 

The central bank held steady the main refinancing rate at 2.15% and the deposit facility rate at 2.0%. 

The policy committee revised higher its 2025 inflation outlook to 2.1% from the previous estimate of 2.0% and GDP growth outlook to 1.2% from 0.9% released in June, respectively.

 

U.S. Stock Movers

Chewy Inc. plunged 16.6% to $35.11 despite the online pet food store operator's earnings matching market expectations. 

Chewy stock had run up in anticipation of its quarterly results in the hopes that the company's results would deliver outsized earnings growth. 

Consolidated revenue increased 9% to $3.10 billion from $2.85 billion, net income plunged to $62 million from $299.1 million, and diluted earnings per share fell to 14 cents from 68 cents a year ago.

Autoship sales grew 15%, making up 83% of total sales, indicating customer loyalty, and both active customers and net sales per average customer rose 4.5% to 21 million and $591, respectively.

Active customers and NSPAC each increased 4.5% from a year ago to nearly 21 million and $591, respectively, highlighting the company’s strong value proposition.

The company estimated adjusted earnings per share between 28 cents and 33 cents, and sales to range between $3.07 billion and $3.1 billion.

Chewy hiked its annual revenue guidance to a range of $12.5 billion and $12.6 billion, from the previous range between $12.3 billion and $12.45 billion. 

Daktronics Inc. jumped 20.4% to $20.98 after the digital LED display technology and audio systems provider said net income swung to a profit from a year ago in the first quarter ending on August 2.

Consolidated revenue decreased to $219 million from $226.1 million, net income swung to a profit of $16.5 million from a loss of $4.9 million, and diluted income per share swung to a profit of 33 cents from a loss of 11 cents a year ago.

Daktronics repurchased approximately 0.6 million shares during the quarter, returning $10.7 million to shareholders at an average price of $16.43 per share.

Oxford Industries jumped 16% to $47.02, and the parent company of Tommy Bahama and Lilly Pulitzer branded apparel stores reported better-than-expected adjusted quarterly results. 

The specialty apparel retailer said it now expects lower than previously expected tariff expenses in the current financial year.