U.S. stocks closed modestly lower on Thursday, with the Dow and the S&P 500 retreating from their previous record highs as higher-than-expected inflation reading and jobless claims raised concerns about the economy’s health. All three major indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) slid 0.1% or 57.88 points, to close at 42,454.12 points.
The S&P 500 declined 0.2% or 11.99 points, to end at 5,780.05 points. Communication services and real estate stocks were the worst performers.
The Communication Services Select Sector SPDR (XLC) fell 0.7%. The Real Estate Select Sector SPDR (XLRE) declined 0.8%, while the Industrials Select Sector SPDR (XLI) lost 0.5%. Nine of the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq shed less than 0.1% or 9.57 points to finish at 18,282.05 points.
The fear-gauge CBOE Volatility Index (VIX) was up 0.34% to 20.93. Decliners outnumbered advancers on the NYSE by a 1.39-to-1 ratio. On the Nasdaq, a 1.59-to-1 ratio favored declining issues. A total of 11.02 billion shares were traded on Thursday, lower than the last 20-session average of 12.06 billion.
CPI Data Unsettles Markets
Stocks retreated from their earlier highs on Thursday as concerns grew over the economy's health following the release of the consumer price index (CPI) data. The Commerce Department said on Thursday that CPI rose 0.2% month over month in September, matching August’s increase but higher than the consensus estimate of a rise of 0.1%.
Year over year, CPI rose 2.4%, the smallest increase in over 3 1/2 years, which keeps hopes alive that the Federal Reserve will announce another rate cut in November.
Core CPI, which excludes the volatile food and energy prices, rose 3.3% year over year, slightly higher than the consensus estimate of a rise of 3.2%.
The data came as concerns grew that the Federal Reserve could slow its pace of future rate cuts. Markets are still pricing in an 85% chance of the Federal Reserve cutting interest rates by 25 basis points in its November policy meeting, according to the CME’s FedWatch tool.
All three major indexes gave up some of the gains from Wednesday following the release of the CPI data. Tech stocks took a beating on Thursday. Shares of Apple Inc. (AAPL) declined 0.2%, while Microsoft Corporation (MSFT) fell 0.4%. Apple has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Moreover, Atlanta Fed President Raphael Bostic said that he would be “totally comfortable” if the Fed skips interest rate cut in November.
Economic Data
The unemployment report further dented investors’ sentiment on Thursday. The Labor Department reported that jobless claims totaled 258,000 for the week ending Oct 5, increasing 33,000 from the previous week’s unrevised level of 225,000. The four-week moving average was 231,000, an increase of 6,750 from the previous week’s unrevised average of 224,250.
Continuing claims came in at 1,861,000, an increase of 42,000 from the previous week’s revised level of 1,819,000. The 4-week moving average was 1,832,000 an increase of 4,500 from the previous week's revised average of 1,827,500.
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