The consumer price index is higher than expected. A “nervous” data point?

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Higher than expected inflation
The U.S. consumer price index rose 0.2% in September, translating to an annual inflation rate of 2.4%, according to the Labor Department. Both figures are 0.1 percentage points above the Dow Jones consensus. Still, the annual rate is at its lowest level since February 2021. Core inflation, which excludes food and energy prices, was also higher than expected.

Too hot for the markets
Major US indexes fell on the hot CPI report. The S&P 500 slipped 0.21% Dow Jones Industrial Average fell by 0.14% and the Nasdaq Composite reduced by 0.05%. The pan-European Stoxx 600 index fell 0.18%. According to the country’s government, Germany’s GDP is expected to shrink by 0.2% this year, marking the second year-on-year decline.

The banks are not yet clear
Lower interest rates tend to benefit banks. As yields on money market funds and other assets fall, this slows the flow of cash from bank accounts. This reduces the cost of funding for banks, while the returns on banks’ income-producing assets do not decline as quickly. But that expectation may not be fulfilled so perfectly this time.

AMD announces new AI chip
AMD announced on Thursday a new artificial intelligence chip, the Instinct MI325X, touted as a competitor to Nvidia’s Blackwell chips. Both are graphics processing units essential for large language models that power next-generation AI systems. If AMD’s chip is seen as a viable alternative to Nvidia’s chip, that could put pricing pressure on Nvidia.

[PRO] Silver lining for the CPI report
Yesterday’s CPI report may have disappointed markets with its better-than-expected numbers. But the report not only has encouraging signs if you read between the lines, it also contains a silver lining, writes CNBC Pro’s Fred Imbert.

When inflation is high, interest rates must be high to cool and slow the economy.

Atlanta Federal Reserve President Raphael Bostic agrees. “I feel completely comfortable with jumping [rate cuts for] a meeting if the data suggests it is appropriate,” Bostic told The Wall Street Journal in an interview Thursday.

The data suggests so. Both the September jobs report and the consumer price index came in hotter than expected. “To me, this unrest means that maybe we should take a break in November,” said Bostic, a voting member of the Federal Open Market Committee.

But Bostic acknowledged that it’s important to see whether individual data points fit together into a larger pattern or whether they’re just “troubled,” as Bostic put it.

The futures market appears to be convinced that the data is flawed. After processing the CPI report, traders increased their bets on a rate cut, according to the CME FedWatch tool.

They now estimate that the probability that the Fed will cut interest rates by a quarter point at its November meeting is 83.3% (up from 80.3%). The increase in stakes is small. But the implications are big: Even after the CPI report, the market still seems more concerned about a slowing economy than inflation remaining stubborn.

That concern could be compounded by jobless claims figures for the week ending Oct. 5. It rose by 33,000 to 258,000 compared to the previous week, the highest level in more than a year.

But even that number could be crazy. “The sharp increase in jobless claims this morning was related to distortions related to the hurricane and was the tip of the spear in terms of distortions of critical economic data in the near future,” said Joseph Brusuelas, chief economist at RSM.

If “critical economic data in the near future” is generally going to be erratic and distorted, it may be best to stay calm and wait out this turbulence.

—CNBC’s Jeff Cox, Samantha Subin and Hakyung Kim contributed to this story.