Wall Street stocks declined on Thursday as hotter-than-expected inflation data for September cast doubt on the Federal Reserve's trajectory for future rate cuts. The Consumer Price Index (CPI) rose 0.2% on a monthly basis and 2.4% year-over-year, exceeding economists' expectations. Core CPI, which excludes volatile food and energy prices, also came in higher at 3.3%. This reinforced traders' bets on a 25-basis-point rate hike (TLT) in November, sending major indexes into the red at market open.
The Dow Jones Industrial Average (DIA) fell by 0.18%, while the S&P 500 (SPY) and Nasdaq (QQQ) dropped by 0.27% and 0.38%, respectively. Rate-sensitive sectors such as Real Estate and Information Technology were particularly hit, with real estate stocks falling 0.6% and tech stocks down 0.5%. Weekly jobless claims also surged, adding to market confusion about the Fed’s path forward. Initial claims rose to 258,000, much higher than the anticipated 230,000, complicating the broader economic outlook.
Market Overview:- September CPI data came in hotter than expected, reinforcing bets on a November rate hike.
- Weekly jobless claims jumped to 258,000, missing estimates and adding market uncertainty.
- The Dow, S&P 500, and Nasdaq all posted losses, with rate-sensitive sectors leading declines.
- Investors are concerned about the Fed’s ability to deliver expected rate cuts amid inflation and labor market data.
- Delta Air Lines shares dropped 2.1% after missing revenue expectations, dragging down the airline sector.
- Fed officials are expected to give further remarks later in the day, as markets await clarity on policy direction.
- Traders will closely monitor third-quarter earnings, with major banks set to report results soon.
- Fed policy and upcoming economic data remain central to market movements and investor sentiment.
- With inflation running hotter than anticipated, the path forward for monetary easing looks increasingly uncertain.
Delta Air Lines (DAL) was among the key laggards, falling 2.1% after missing third-quarter revenue estimates and warning of slower travel demand. Other airlines followed suit, with United Airlines (UAL), American Airlines (AAL), and Southwest Airlines (LUV) also posting losses. While inflation remains the central issue driving market sentiment, rising jobless claims are complicating the economic picture, raising questions about the strength of the labor market and the Fed's next move.
As third-quarter earnings season begins, investors will look to key corporate reports for signs of economic resilience amid the challenging macro backdrop. With expectations of a 25-basis-point rate hike growing, markets will remain sensitive to incoming data, particularly as Fed officials continue to make public remarks. Equity markets may continue to face pressure until a clearer picture of the Fed’s rate path emerges.
