US benchmark equity indexes experienced a notable downturn during intraday trading following the release of official data indicating that consumer inflation surged at a rate surpassing prior projections in September. The Dow Jones Industrial Average recorded a decline of 0.3%, landing at 42,394.7 by midday Thursday, while the S&P 500 saw a slight decrease of 0.2%, reaching 5,778.8.
The Nasdaq Composite, not to be left out, dropped 0.1% to settle at 18,277.7. Among the various sectors, the real estate sector suffered the most significant losses, while energy stocks led the gainers. In terms of economic indicators, the US consumer price index registered a 0.2% increase last month, mirroring the unchanged rates of July and August, as per data released by the Bureau of Labor Statistics.
This reading exceeded the forecast of 0.1% from a survey compiled by Bloomberg. On an annual basis, inflation showed signs of ease, with figures dropping to 2.4% from the 2.5% recorded in August, albeit higher than the Wall Street consensus of 2.3%. BMO Capital Markets remarked, "Inflation still has some spark," indicating ongoing concerns about rising prices during economic recovery. In a significant policy move, the Federal Reserve had lowered its benchmark lending rate by 50 basis points last month.
This decision contrasted with a Bloomberg-compiled consensus predicting only a quarter-percentage-point decrease. On Thursday, the market probability of the Federal Open Market Committee implementing a 25 basis point reduction in interest rates remained constant at 80% from the previous day, based on data from the CME FedWatch tool. Looking ahead, the release of the US producer prices report for September is scheduled for Friday, which may further influence market expectations and monetary policy outlook. Furthermore, weekly applications for unemployment insurance in the US rose more than anticipated, reaching their highest level since August 2023, as reflected in the latest government data. In terms of yields, the US two-year yield fell by 1.8 basis points to 4% intraday, whereas the 10-year rate saw an increase of 3.7 basis points, peaking at 4.10%. With inflation edging closer to the Federal Open Market Committee's goal of 2%, New York Fed President John Williams reassured that the economy is in a favorable position, stating, "the labor market remains solid." Williams added, "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 that policymakers will remain data-driven in their decisions." Oil markets also reacted sharply, with West Texas Intermediate crude oil surging by 3.9% to $76.12 a barrel intraday.
D.A. Davidson commented, "Oil prices gained traction, bolstered by a significant increase in fuel demand as Hurricane Milton approached Florida, alongside ongoing concerns regarding supply risks in the Middle East." In noteworthy corporate developments, First Solar ($FSLR) experienced a sharp decline in shares, plummeting by 10%, making it the worst performer on the S&P 500, following Jefferies' adjustment of its price target for the stock from $271 to $266. Delta Air Lines ($DAL) presented a bleak outlook for fourth-quarter earnings, forecasting weakened travel demand amidst the upcoming US presidential elections.
This forecast came as the company's earnings fell short of market expectations in the previous three-month period, despite revenue surpassing forecasts. Consequently, Delta's shares fell by 1.9%. Conversely, CrowdStrike ($CRWD) stood out among S&P 500 and Nasdaq gainers, climbing 3.7%. The company announced a collaboration with Plurilock Security aimed at securing critical infrastructure in democratic economies against looming cybersecurity threats. In the commodities market, gold prices edged up by 0.6% to reach $2,641.60 per troy ounce, while silver saw a more significant jump of 1.9%, hitting $31.25 per ounce..