Wall Street muted as investors digest inflation data

NEW YORK: Wall Street’s main indexes were subdued in choppy trading on Thursday, as data showed consumer prices rose more than anticipated in September, although underlying price pressures eased, clouding the Federal Reserve’s interest rate outlook.

Surging rental costs pushed consumer prices higher last month, while the annual increase in the core figure, excluding volatile food and energy components, last month was the smallest in two years.

“Headline inflation was a little hot because of energy, but core prices remained subdued ... this number isn’t great for the bulls but also doesn’t give much reason to be bearish,” said David Russell, global head of market strategy at TradeStation.

“The latest surge in yields has gotten rates to a place where the Fed feels much less need to act ... inflation and the Fed will be less of a news driver in coming months as all the tightening gradually takes effect.”

Another set of data showed jobless claims rose 209,000 for the week ended Oct. 7, lower than an estimated 210,000 rise. US benchmark 10-year yields rose to 4.6512% after falling for two straight days, putting real estate , consumer staples and utilities - often considered as bond proxies - amongst the worst hit S&P 500 sectors on Thursday.

Energy and information technology were among the gainers in afternoon trading.

Traders expect a stronger chance the Fed will end up delivering another interest-rate hike this year, and keep rates higher for longer next year.

Boston Fed President Susan Collins, who does not have a vote on the rate-setting Federal Open Market Committee (FOMC) this year, said on Wednesday that while the odds of the economy escaping a recession have grown, it is 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 US economy, with volatile data and tightening financial markets posing risks to growth. At 12:05 p.m. ET, the Dow Jones Industrial Average was down 30.64 points, or 0.09%, at 33,774.23, the S&P 500 was up 1.36 points, or 0.03%, at 4,378.31, and the Nasdaq Composite was up 30.08 points, or 0.22%, at 13,689.75.