US stocks weakened today, reacting to a September inflation report that came in higher than expected. Investors fear that persistent price pressures will force the US Federal Reserve (Fed) to raise interest rates again. That would make borrowing and corporate financing more expensive, which weighed particularly on shares of tech companies such as Oracle, CoreWeave, and other firms focused on artificial intelligence (AI).
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Inflation Rebound Knocks US Stocks Lower
The Dow Jones Industrial Average fell 48.62 points, or 0.09 percent, to 51,621.48 points. The broader Standard & Poor’s 500 index declined 86.51 points, or 1.11 percent, to 7,718.94 points. The tech-heavy Nasdaq Composite dropped 511.51 points, or 1.88 percent, to 26,692.87 points.
The US Department of Labor announced today that US consumer prices rose 3.7 percent year-over-year in September, following a 3.4 percent increase in August. Analysts had expected annual inflation to come in at 3.6 percent. Core inflation, which excludes food and energy prices, accelerated to 2.6 percent year-over-year from 2.4 percent. “Investors are not thrilled with this report because it puts pressure on the Fed to hike rates to combat inflation,” said Adam Sarhan, an analyst at 50 Park Investments. “Inflation remains public enemy number one for both the market and the Fed,” he added.
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Tech and Banks Slide as the Dollar Gains
Eight of the 11 sub-sectors comprising the S&P 500 posted declines, with information technology and communication services suffering the steepest losses. Shares of Bank of America and Morgan Stanley also fell after reporting their quarterly earnings. Meanwhile, a rating downgrade from Barclays dragged down shares of Dell and Hewlett Packard Enterprise, Reuters reported.
The US dollar strengthened following the inflation report. The US Dollar Index, which tracks the greenback’s performance against a basket of six major world currencies, rose 0.4 percent to 102.54 points. The euro fell 0.4 percent against the dollar to 1.1155 USD. The dollar was virtually unchanged against the yen at 158.32 JPY. The euro slipped 0.4 percent against the yen to 176.64 JPY.
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Source: Reuters
