Miguel Santiago
U.S. stocks ended in the red on Thursday as a rise in Treasury yields put pressure on stocks. Confidence was also affected by better-than-expected consumer inflation data.
Results were also in the spotlight, with companies like Delta Air Lines (give it) and Walgreen Boot Alliance (AMB) kicking off the third quarter earnings season. The focus is on the big banks reporting on friday.
The tech-heavy Nasdaq Composite (IND COMP.) regressed 0.63% to close at 13,574.22 points. The S&P 500 Benchmark Index (SP500) refused 0.62% to settle at 4,349.61 points, while the frontline Dow (dji) fell 0.51% to finish at 33,631.14 points.
Nine of the 11 S&P sectors finished in negative territory, led by rate-sensitive names like utilities and real estate. technology and Energy were the two winners.
A day after the markets received more interesting producer price index (PPI) data than expected, the general consumer price index (PPI) for September reached +0.4% monthly, higher than the figure of +0.3% consensus. The core CPI, which excludes food and energy, rose 0.3% month-on-month compared to a forecast increase of 0.3%.
According to the CME FedWatch tool, the odds of the Federal Reserve keeping rates steady at its November meeting barely changed. However, the probability of a quarter-point increase at the December meeting has increased slightly to 31.4% from 26.3% a day ago.
Treasury yields rose after the CPI data. Additionally, a closely watched $20 billion 30-year bond auction failed, a day after the 10-year auction also disappointed. The 30-year bond yield (US30Y) rose to a session high of 4.89%. The 10-year yield (US10Y) rose 11 basis points to 4.71%, while the 2-year yield (US2Y), which is more sensitive to upcoming rate decisions, rose 6 basis points to 5.07 %.
See how Treasury yields have performed across the curve on the Seeking Alpha bond page.
Thursday’s economic calendar also showed that the number of Americans filing initial unemployment claims last week remained near record lows, pointing to continued resilience in the labor market.
“Another one of those days. Not only was inflation slightly higher than expected, it was another indication that the fight against inflation is not over. Persistent inflation is the last thing the Federal Reserve needs in a weakening economy .growth, high oil prices and a whole new layer of geopolitical risks,” Leo Nelissen, part of the iREIT investment group in Alpha, told Looking Alpha.
“In light of higher yields, sensitive sectors such as consumer staples and real estate stocks suffered the most. These sectors have eroded pricing power and are feeling the pressure of weakening economic demand. A Unless inflation drops or economic growth remains strong, we are headed toward “I see no end to this volatile market over the next few months, maybe quarters,” Nelissen added.
On the earnings front, Delta Air Lines (DAL) finished slightly higher after the No. 1 U.S. airline reported quarterly results that handily beat estimates thanks to strong demand and improving business travel. .
Dow 30 component Walgreens Boots Alliance (WBA) closed slightly lower after the drugstore chain posted unsatisfactory quarterly results and weak guidance.
Big banks JPMorgan (JPM) and Citigroup (C) will report on Friday, along with insurance giant UnitedHealth (UNH).
