US equity indexes experienced a downturn after midday Thursday as an increase in wholesale price inflation raised concerns about the continued support for a dovish monetary policy. The S&P 500 and the Dow Jones Industrial Average fell by 0.4% each, settling at 5,960.5 and 43,781.1 respectively, while the Nasdaq Composite decreased by 0.5% to 19,135.1.
The sectors leading the decline were industrials and communications services, while utilities and technology showed gains during intraday trading. In significant economic news, the US Producer Price Index rose by 0.2% in October, surpassing the 0.1% increase recorded in September. This data aligns with a survey compiled by Bloomberg.
Notably, when excluding food and energy prices, the core PPI increased by 0.3%, exceeding the anticipated 0.2% gain and following a similar 0.2% rise the prior month. Year-over-year, the PPI saw a rise of 2.4% in October, while core PPI jumped by 3.1%, both above their respective figures of 1.9% and 2.9% noted in September, as reported by the Bureau of Labor Statistics. Inflation remains a critical concern, showing little improvement in core consumer prices since June, coupled with an acceleration in producer prices during October, as highlighted in a research note from Stifel.
Chief Economist Lindsey Piegza remarked, "Coupled with resilient and, in some cases, robust consumer spending resulting in a solid pace of domestic activity, stubbornly sticky price pressures underscore the need for a slow and tempered pace of policy adjustment going forward." She added, "Already reducing the size of rate cuts between September and November, any further 'surprises' in the inflation data could warrant a reduced pace as well, meaning a potential pause as early as next month." Fed Chair Jerome Powell is expected to speak at the Dallas Regional Chamber later on Thursday, making his remarks a focal point for market participants. Additionally, US initial jobless claims disclosed by the US Labor Department on Thursday fell to 217,000 for the week ending November 9, down from an unrevised 221,000 the preceding week, and slightly better than the forecast of 220,000 from a Bloomberg survey.
The four-week moving average also fell by 6,250 to 221,000 after a reduction of 9,750 to 227,250 as elevated weekly initial claims recorded in October, influenced by two hurricanes, continued to drop out of the calculations. Treasury yields in the US mostly declined, with the 10-year yield decreasing by 4.5 basis points to 4.41%, and the two-year yield slipping just under one basis point to 4.28%. In company news, Walt Disney's ($DIS) fiscal Q4 results surpassed market expectations, attributed to strong performance from its streaming segment, projecting high-single-digit adjusted earnings growth in fiscal 2025 on a year-over-year basis.
This led to a more than 5% increase in shares during intraday trading, marking it as the highest performer on the Dow. On another note, Tapestry ($TPR) and Capri Holdings ($CPRI), the parent company of Versace, have mutually agreed to terminate their proposed merger amid uncertainties regarding regulatory approvals, as stated in separate announcements on Thursday.
In the wake of this news, Tapestry's shares rose over 12%, making it the largest gainer on the S&P 500. Conversely, Super Micro Computer ($SMCI) faced a slump of over 9% intraday, emerging as the poorest performer on both the S&P 500 and the Nasdaq, following a 6.3% drop the previous day. The company indicated that it requires more time to finalize its financial statements and disclosures for the quarterly report closing on September 30. On the commodities front, West Texas Intermediate crude oil prices fell by 0.3% to $68.19 a barrel, while gold decreased by 0.4% to $2,575.51 an ounce, and silver slipped by 0.3% to $30.57 an ounce..