S&P 500 Gains 0.75% as Fed Hike Odds Reach 90%

Key Takeaways

• August Core CPI printed at 0.3% MoM against 0.2% expected, driving September Fed rate hike probabilities from 60% up to 90%.
• U.S. equity futures absorbed the hotter core monthly print, with S&P 500 futures climbing 0.75% and Nasdaq futures gaining 0.84%.
• Two-year Treasury yields increased 5 basis points, triggering U.S. Dollar strength that pushed down EUR/USD and GBP/USD.
• Oracle surged over 6% on strong fiscal Q1 earnings, providing underlying support to equity market sentiment.

August CPI Triggers 90% Fed Hike Probability

On Friday, September 11, 2026, S&P 500 futures rose 0.75% while U.S. equity markets absorbed the August inflation report, even as market pricing for a Federal Reserve rate hike next week jumped to 90% from 60% yesterday.

The headline Consumer Price Index (CPI) printed at 3.4% year-on-year, matching expectations and remaining unchanged from July. On a monthly basis, headline CPI expanded by 0.4%, also matching consensus forecasts. Core CPI, which excludes volatile food and energy components, moderated to 2.4% year-on-year from 2.5%, representing the smallest annual increase in core inflation since March 2021.

However, the monthly core reading delivered a subtle hawkish shock. Core CPI rose 0.3% month-on-month against the 0.2% expected. Coming on the back of last Friday's stronger-than-expected non-farm payrolls report, this uptick in core momentum drove fixed-income traders to heavily price in a Fed rate increase next week. Following the release, two-year Treasury yields climbed approximately 5 basis points. My desk at PropFirmScan tracked how institutional desks navigated this shift by monitoring the market smart money positioning after the decision.

Stock Index Dynamics and Technical Levels

Equity markets displayed notable resilience despite rising borrowing cost expectations. Dow futures gained 0.83%, Nasdaq futures rose 0.84%, and European indices mirrored the positive momentum with the FTSE up 0.74% and the DAX gaining 0.44%.

From a technical perspective, the S&P 500 recently pulled back from its record high of 7,810 to test support around its 50-day Exponential Moving Average (EMA) at 7,600, a level that coincides with the June peak. Price action has since stabilized slightly above this support zone.

• Upside Resistance: If the 50 EMA holds, buyers face initial resistance at 7,700, followed by the September high at 7,750, before retesting the record peak at 7,810.
• Downside Risk: A daily close below the 50 EMA opens technical exposure toward the 100 EMA at 7,470. Further selling would bring the July low of 7,300 and the June low of 7,225 into focus.

Corporate earnings also provided structural support for equities. Oracle shares jumped over 6% after reporting fiscal Q1 adjusted EPS of $1.92 on revenue of $19.35 billion, topping expectations of $1.74 and $19.14 billion respectively, driven by cloud infrastructure revenue doubling to $7.4 billion. Conversely, Adobe dropped 4% after issuing current-quarter earnings guidance of $6.30 to $6.35 per share on revenue of $6.8 billion to $6.85 billion.

FX and Commodity Cross-Asset Signals

The U.S. Dollar inched higher following the CPI release, exerting downward pressure on major currency pairs. EUR/USD moved lower despite the European Central Bank's 25 basis point rate hike yesterday, which was accompanied by upward revisions to inflation projections for 2027 and 2028.

GBP/USD also declined under broad U.S. Dollar strength, overlooking domestic economic data showing UK GDP grew 0.4% month-on-month in July. Meanwhile, crude oil eased slightly but maintained its position above $100 per barrel.

Traders reviewing firm conditions can check our firm comparison for central bank event trading to evaluate spreads during high-impact data releases.

Market Impact Snapshot

Prop Account Risk Management on Rate Decisions

With Fed rate hike expectations at 90%, any departure from market pricing during next week's FOMC announcement would trigger substantial volatility across index and foreign exchange markets. If the Fed refrains from hiking, market participants will closely scrutinize official statements, with potential upside pressure targeting the 5% yield mark on 10-year Treasuries.

For funded traders, high-volatility events present strict execution risks. High slippage around rate decisions can easily trigger automated loss limits. Reviewing news event trading policies across prop firms is essential for avoiding policy breaches while holding positions during central bank announcements. Traders evaluating risk profiles can also consult our data on challenge success rates during economic-data market phases.

Maintaining strict position sizing discipline during an evaluation phase prevents unnecessary drawdowns when fundamental catalysts drive rapid re-pricing. Understanding your firm's daily loss limit policies remains the single best safeguard during central bank rate cycles. For detailed guidance on navigating policy shifts, see our central bank rate decisions guide.

Traders operating active strategies during macro releases should also monitor payout timelines for traders capitalising on S&P500 Forecast: SPX to manage capital allocation efficiently, particularly when engaging in short-term day trading execution.

Frequently Asked Questions

Why did the S&P 500 rise despite higher Fed rate hike expectations

Equities rose because annual CPI and headline monthly CPI figures matched expectations, reassuring investors that broad inflation is not accelerating out of control. Strong corporate earnings, particularly from tech giants like Oracle, also bolstered index sentiment.

How did foreign exchange markets react to the August CPI report

The U.S. Dollar strengthened as a hotter month-on-month core CPI reading increased the likelihood of a Fed rate hike to 90%. This dollar strength pushed both EUR/USD and GBP/USD lower despite positive domestic releases in Europe and the UK.

What technical levels are key for the S&P 500 following the CPI print

Immediate support rests at the 50 EMA near 7,600, which aligns with the June high. On the upside, resistance stands at 7,700 and 7,750 ahead of the record high at 7,810. A breakdown below