By Sinéad Carew and Lisa Pauline Mattackal
(Reuters) -Wall Street’s major indexes closed lower on Thursday as investors looked to higher-than-expected inflation and unemployment claims for clues about the health of the U.S. economy and the path for interest rates.
The closely watched consumer price index rose 0.2% month on month and 2.4% year on year in September, with both figures slightly higher than estimated by economists polled by Reuters.
The headline figure, which excludes volatile food and energy prices, rose 3.3% year-on-year, versus an estimate of 3.2%.
In a separate report released Thursday, unemployment claims also rose to 258,000 for the week ending Oct. 5, versus an estimate of 230,000.
“Investors were torn between a stronger-than-expected CPI report and a weaker-than-expected unemployment report,” said Jack Ablin, chief investment officer at Cresset Capital in Chicago. “One showed inflation was higher than expected and the other showed the economy looking weaker than expected. It’s the worst of both worlds.”
Following the economic data, traders estimate a roughly 80% probability that the Federal Reserve will cut rates by 25 basis points at its November meeting and a roughly 20% probability that rates will remain unchanged, according to CME’s FedWatch.
Atlanta Federal Reserve Bank President Raphael Bostic said Thursday he would feel “completely comfortable” skipping a rate cut at an upcoming U.S. central bank meeting, adding that the “jerkyness” recent inflation and employment data could justify the severance rate. November on hold.
Chicago Fed President Austan Goolsbee said he sees “gradual” rate cuts over the next year and a half, while the New York Fed’s John Williams said he still sees rate cuts on the horizon.
The countries fell 57.88 points, or 0.14%, to 42,454.12, lost 11.99 points, or 0.21%, to 5,780.05 and lost 9.57 points, or 0.05% , to 18,282.05.
Both the S&P 500 and the Dow Jones had reached record highs during the previous day’s session.
Only three of the S&P 500’s 11 major industrial sectors advanced on energy Thursday, rising 0.8% and outperforming the rest as oil prices rose. [O/R]
Oil futures rose as U.S. fuel consumption spiked ahead of Hurricane Milton, which made landfall on Florida’s west coast late Wednesday. Oil prices are also supported by supply concerns due to conflict in the Middle East.
Investors are also preparing for third-quarter earnings season, with the major banks set to announce their results on Friday.
According to LSEG estimates, third-quarter earnings growth for the S&P 500 is estimated to be 5% annualized.
In individual stocks, Delta Air Lines (NYSE:) fell 1% after forecasting quarterly revenue below expectations in anticipation of lower travel spending. Other airlines also lost ground with American Airlines (NASDAQ:) down 1.4%.
Shares of Pfizer (NYSE:) fell 2.8% as former executives distanced themselves from activist investor Starboard’s campaign against the drugmaker.
On US stock exchanges, 11.02 billion shares changed hands, compared to the moving average of 12.06 billion over the past twenty sessions.
There were 185 new highs and 55 new lows on the NYSE, by a 1.39-to-1 ratio.
On the Nasdaq, 1,616 stocks rose and 2,576 fell as declining issues outpaced advancers by a 1.59-to-1 ratio. The S&P 500 posted 22 new highs over the past 52 weeks and two new lows, while the Nasdaq Composite posted 60 new recorded highs and 163 new lows.
