Wall Street ends slightly lower after higher than expected inflation, unemployment

By Sinéad Carew and Lisa Pauline Mattackal

(Reuters) -Wall Street’s main indexes closed lower on Thursday as investors looked to higher-than-expected inflation and unemployment claims for indications on the health of the U.S. economy and the path for interest rates.

The closely watched Consumer Price Index rose 0.2% on a monthly basis in September and 2.4% on an annual basis, with both figures being slightly higher than estimated by economists polled by Reuters.

The core figure, which excludes volatile food and energy prices, rose 3.3% year-over-year, versus an estimate of 3.2%.

In a separate report released on Thursday, jobless claims also rose to 258,000 for the week ending Oct. 5, versus an estimate of 230,000.

“Investors were torn between a stronger than expected CPI report and a weaker than expected unemployment claims report,” said Jack Ablin, chief investment officer at Cresset Capital in Chicago. “One showed inflation running hotter than expected and the other showed the economy looking weaker than expected. It’s the worst of both worlds.”

After the economic data, traders were pricing in a roughly 80% probability that the Federal Reserve will cut rates by 25 basis points at its meeting in November and a roughly 20% chance it would leave rates unchanged, according to CME’s FedWatch.

Atlanta Federal Reserve Bank President Raphael Bostic on Thursday said he would be “totally comfortable” skipping an interest-rate cut at an upcoming meeting of the U.S. central bank, adding that the “choppiness” in recent data on inflation and employment may warrant leaving rates on hold in November.

Chicago Fed President Austan Goolsbee said he sees “gradual” rate cuts over the next year-and-a-half, while the New York Fed’s John Williams said he still sees rate reductions ahead.

According to preliminary data, the S&P 500 lost 11.77 points, or 0.20%, to end at 5,780.27 points, while the Nasdaq Composite lost 9.73 points, or 0.05%, to 18,281.89. The Dow Jones Industrial Average fell 55.45 points, or 0.13%, to 42,456.55.

Both the and the Dow had notched record closing highs in the previous day’s session.

During Thursday’s session energy outperformed other sectors as oil prices rose. [O/R]

Oil futures were rallying as U.S. fuel use had spiked ahead of Hurricane Milton, which made landfall on Florida’s west coast late on Wednesday. Oil prices are also being supported by supply concerns related to conflicts in the Middle East.

Investors are also preparing for the third-quarter earnings season, with major banks scheduled to report results on Friday.

The third-quarter earnings growth rate for the S&P 500 is estimated to come in at 5% year-over-year, according to estimates compiled by LSEG.

In individual stocks, Delta Air Lines (NYSE:) fell after it forecast quarterly revenue below expectations in anticipation of slower travel spending. Other airlines, American Airlines (NASDAQ:), also lost ground.

Shares of Pfizer (NYSE:) fell as former executives distanced themselves from activist investor Starboard’s campaign against the drugmaker.