After turning in a strong performance in the previous session, stocks saw modest weakness during trading on Thursday. The major averages all gave back ground, with the Dow and the S&P 500 pulling back off yesterday’s record closing highs.

The major averages moved to the upside going into the close of trading but remained in the red. The Dow (DOWI:DJI) slipped 57.88 points or 0.1 percent to 42,454.12, the Nasdaq (NASDAQI:COMP) edged down 9.57 points or 0.1 percent to 18,282.05 and the S&P 500 (SPI:SP500) dipped 11.99 points or 0.2 percent to 5,780.05.

The modest weakness on Wall Street came following the release of a highly anticipated Labor Department report showing consumer prices in the U.S. increased by slightly more than expected in the month of September.

The Labor Department said its consumer price index rose by 0.2 percent in September, matching the increase seen in August. Economists had expected consumer prices to inch up by 0.1 percent.

The report also said core consumer prices, which exclude food and energy prices, climbed by 0.3 percent for the second consecutive month. Core prices were expected to rise by 0.2 percent.

Meanwhile, the Labor Department said the annual rate of consumer price growth slowed to 2.4 percent in September from 2.5 percent in August. Economists had expected the pace of price growth to slow to 2.3 percent.

The annual rate of core consumer price growth accelerated to 3.3 percent in September from 3.2 percent in August, while economists had expected the pace of growth to remain unchanged.

The bigger than expected increase by consumer prices further offset optimism the Federal Reserve will continue to aggressively lower interest rates in the coming months.

CME Group’s FedWatch Tool is currently indicating an 84.0 percent chance the Fed will lower rates by 25 basis points next month after slashing rates by 50 basis points last month.

Following the data, Atlanta Federal Reserve President Raphael Bostic told the Wall Street Journal he was “definitely open” to leaving interest rates unchanged in November.

Negative sentiment was also generated in reaction to a separate Labor Department report showing first-time claims for U.S. unemployment benefits increased by much more than expected in the week ended October 5th.

The report said initial jobless claims climbed to 258,000, an increase of 33,000 from the previous week’s unrevised level of 225,000. Economists had expected jobless claims to edge up to 230,000.

With the much bigger than expected increase, jobless claims reached their highest level since hitting a matching figure in the week ended August 5th, 2023.

Sector News

Housing stocks saw considerable weakness on the day, resulting in a 1.2 percent decrease by the Philadelphia Housing Sector Index.

Notable weakness was also visible among telecom stocks, as reflected by the 1.1 percent loss posted by the NYSE Arca North American Telecom Index.

Networking, commercial real estate and computer hardware stocks also saw some weakness, while gold stocks moved sharply higher amid an increase by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan’s Nikkei 225 Index rose by 0.3 percent, while China’s Shanghai Composite Index jumped by 1.3 percent and Hong Kong’s Hang Seng Index surged by 3.0 percent.

Meanwhile, the major European markets showed modest moves to the downside on the day. While the U.K.’s FTSE 100 Index edged down by 0.1 percent, the French CAC 40 Index and the German DAX Index both dipped by 0.2 percent.

In the bond market, treasuries extended a recent downward trend in reaction to the inflation data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose 2.9 basis points to a two-month closing high of 4.096 percent.

Looking Ahead

A report on producer price inflation is likely to attract attention on Friday along with readings on consumer sentiment and inflation expectations.

SOURCE: RTTNEWS