On Thursday, US benchmark equity indexes experienced declines following the release of official data indicating that consumer inflation increased at a faster-than-expected rate in September. The S&P 500 decreased by 0.2%, closing at 5,780.1, while the Dow Jones Industrial Average fell by 0.1% to 42,454.1, both indices retracting from the previous day’s record highs.
In addition, the Nasdaq Composite also saw a minor decrease of 0.1%, settling at 18,282.1. Among the various sectors, real estate suffered the most significant losses, whereas energy emerged as the leading sector gainers. In economic terms, the US consumer price index rose by 0.2% in September, matching the increases observed in July and August, as reported by the Bureau of Labor Statistics.
This latest inflation reading surpassed the forecasted increase of 0.1% from a Bloomberg-compiled survey. Year-on-year, inflation moderated slightly to 2.4%, down from 2.5% in August, yet it remained above the Wall Street consensus of 2.3%. BMO Capital Markets commented on the scenario, stating, "Inflation still has some spark." The probability that the Federal Reserve will lower its benchmark lending rate by 25 basis points next month surged to 86% on Thursday, an increase from 80% noted the previous day.
Concurrently, the expectation for rates staying unchanged declined to 14%, down from 20%, according to insights from the CME FedWatch tool. In the prior month, the Federal Open Market Committee of the central bank made a significant move by cutting interest rates by 50 basis points, in contrast to a consensus from Bloomberg that anticipated a quarter-percentage-point reduction. Additionally, the US producer prices report for September is set to be released on Friday. In the realm of employment, weekly applications for unemployment insurance in the US exceeded expectations, reaching a peak not seen since August 2023, based on government data. The yield on the US two-year note decreased by 5.1 basis points to 3.97% on Thursday, whereas the yield on the 10-year note remained relatively stable at 4.07%. John Williams, President of the New York Fed, expressed confidence regarding inflation trends, stating, "Inflation is closing in on the FOMC's 2% target, while the economy is in a 'good place' and the labor market remains solid." He further elaborated, "Based on my current forecast for the economy, I expect that it will be appropriate to continue the process of moving the stance of monetary policy to a more neutral setting over time," emphasizing the Fed's reliance on economic data. In the commodities market, West Texas Intermediate crude oil prices surged by 3.3%, reaching $75.63 a barrel.
D.A. Davidson noted in a communication with clients that "Oil prices gained, supported by a spike in fuel demand as Hurricane Milton impacted Florida, alongside concerns regarding Middle East supply risks." In company-specific developments, First Solar saw a notable decline in its shares, plummeting 9.3% and becoming the worst performer on the S&P 500, following Jefferies' revision of its price target for the stock down to $266 from $271. Delta Air Lines provided a disappointing outlook for its fourth-quarter earnings, citing expectations of subdued travel demand amid the upcoming US presidential elections in November.
The airline’s earnings fell short of market predictions in the previous quarter, despite revenue exceeding forecasts. Consequently, shares of Delta closed 1.1% lower. CrowdStrike emerged as the top performer on the S&P 500 and secured the second-best position on the Nasdaq with an increase of 5.6%.
The company announced a partnership with Plurilock Security aimed at enhancing cybersecurity frameworks for critical infrastructure across “democratic nations and economies.” Reporting expectations loom for JPMorgan Chase, Wells Fargo, and Bank of New York Mellon, with all three set to unveil their quarterly earnings on Friday, alongside asset management giant BlackRock. In the precious metals market, gold prices climbed by 0.9% to $2,648.60 per troy ounce, whereas silver showed a more robust gain of 2.4%, reaching $31.39 per ounce..