Wall Street dips as Treasury yields rise after inflation data

By Shashwat Chauhan and Ankika Biswas

(Reuters) – Wall Street’s main indexes fell on Thursday as Treasury yields rose after data showed consumer prices rose more than expected in September, although underlying price pressures eased.

The Labor Department report showed U.S. consumer prices rose 0.4% in September versus estimates of a 0.3% rise, according to economists polled by Reuters. Prices rose to 3.7% against estimates of 3.6% in the 12 months through September.

Core CPI, which excludes volatile food and energy prices, rose 0.3% in line with estimates.

“The headline numbers always get the most attention, but it is important to look at the core because that’s what the Fed uses to make any decisions,” said Art Hogan, chief market strategist at B. Riley Wealth.

“The Fed’s going to find themselves to be overly restrictive by the first half of next year and their next move likely will be to cut rates gradually into the second half.”

Another set of data showed jobless claims rose 209,000 for the week ended Oct. 7, lower than an estimated 210,000 rise.

U.S. benchmark 10-year yields rose to 4.638% after falling for two straight days.

Traders see a stronger chance the Federal Reserve will end up delivering another interest rate hike this year and keep rates higher for longer next year.

Boston Fed President Susan Collins said on Wednesday while the odds of the economy escaping a recession have grown, it’s possible the central bank is not done with interest rate hikes aimed at bringing inflation back to its target.

Remarks from other Fed policymakers, including Atlanta’s Raphael Bostic, are also expected on Thursday.

Minutes of the Fed’s Sept. 19-20 meeting showed a growing sense of uncertainty around the path of the U.S. economy, with volatile data and tightening financial markets posing risks to growth.

Meanwhile, Israel said there would be no humanitarian exceptions to its siege of the Gaza Strip until all its hostages were freed.

Public broadcaster Kan said the Israeli death toll had risen to more than 1,300, while Gaza authorities said 1,354 Palestinians have been killed and more than 6,000 wounded in retaliatory bombings.

At 9:55 a.m. ET, the Dow Jones Industrial Average was down 94.20 points, or 0.28%, at 33,710.67, the S&P 500 was down 10.30 points, or 0.24%, at 4,366.65, and the Nasdaq Composite was down 19.61 points, or 0.14%, at 13,640.07.

Real estate and consumer staples were among the worst hit S&P 500 sectors, while energy was the top gainer.

Fastenal rose 5% after the industrial supplies company beat third-quarter profit estimates.

Declining issues outnumbered advancers for a 2.76-to-1 ratio on the NYSE and a 2.43-to-1 ratio on the Nasdaq.

The S&P index recorded 14 new 52-week highs and 15 new lows, while the Nasdaq recorded 22 new highs and 137 new lows.

(Reporting by Shashwat Chauhan and Ankika Biswas in Bengaluru; Additional reporting by Johann M Cherian; Editing by Arun Koyyur and Shounak Dasgupta)