Stock futures fall red as inflation lifts Treasury yields
U.S. stocks fell after September inflation exceeded expectations on an annual basis and Treasury yields climbed. The S&P 500 lost 0.6% and the Nasdaq Composite…
Stock futures fall red as hotter-than-expected September inflation pushed Treasury yields higher and weighed on U.S. shares on Wednesday. The S&P 500 fell 0.6% and the Nasdaq Composite lost 0.8%, while the Dow Jones Industrial Average declined 32 points, or 0.1%.
The inflation reading strengthened pressure on stocks as investors weighed the prospect of near-term rate hikes. Higher yields can make equities less attractive, and the move also raised concerns about the cost of borrowing across the market.
The consumer price index rose 0.6% in September from the previous month, matching expectations. Its annual increase reached 3.7%, above the 3.6% economists polled by Dow Jones had forecast.
Core CPI, which excludes food and energy, increased 0.3% month over month and 2.6% year over year. Economists had expected increases of 0.2% and 2.5%, respectively.
Treasury yields climbed after the report. The 10-year yield rose more than 7 basis points to 5.293%, while the 30-year yield gained more than 4 basis points to 5.609%. Both had reached new 24-year highs last week, CNBC reported.
“Today's release should be a modest headwind to risk assets, as expectations for near-term rate hikes increases pressure on the long end of the curve which should strengthen the dollar but be a headwind for equity valuations,” said Jeff Schulze, head investment strategist at Franklin Templeton Institute.
Stock futures fall red as banks and chipmakers slide
Bank of America shares dropped 7% after the company reported third-quarter results. The decline followed more than $1.2 billion in federal penalties announced a day earlier. Regulators said the bank failed to report more than $5 billion in “suspicious” transactions.
Morgan Stanley also traded nearly 2% lower, despite quarterly results that topped expectations. The moves came after shares of Goldman Sachs and Citigroup fell Tuesday, even as several major banks reported strong quarterly results.
The reaction points to a tougher test for companies during the third-quarter earnings season: solid results alone may not be enough to lift share prices. That matters for investors watching whether corporate performance can offset the pressure from inflation and higher borrowing costs.
Technology shares faced another drag from chipmakers. Micron Technology fell 1% after losing more than 3% in the prior trading session. Advanced Micro Devices declined 3%, while Intel and Sandisk each lost 2%.
Oil added to the inflation concern. U.S. West Texas Intermediate futures rose 1% to around $95 per barrel on Wednesday. Gasoline was averaging $4.34 a gallon, compared with $3.08 per gallon a year earlier, according to AAA.
President Donald Trump announced last week that he would temporarily ease restrictions on Russian diesel fuel exports. Analysts cited by CNBC did not expect the move to do much to lower fuel costs for truckers and farmers.
JPMorgan also remained in focus after reporting lower-than-expected third-quarter net revenues and adjusted earnings per share on Tuesday. Wells Fargo analyst Mike Mayo said the results were “more than mitigated” by the bank’s guidance.
JPMorgan guided for 10% net interest income growth in 2027 with about 4% expense growth. Mayo said the outlook should “provide confidence of 2027 as a payoff year after a period of investments.” Wells Fargo has an overweight rating on the stock and a price target of $390 per share.
At the opening bell Wednesday, the S&P 500 was down 0.4%, the Nasdaq Composite fell 0.7% and the Dow shed 80 points, or 0.2%. The indexes remained lower as investors assessed the inflation report and company results.
Source: cnbc.com
