Stocks and Bonds Fall on a Strong CPI Report

The S&P 500 Index ($SPX) (SPY) is down by -0.75% today, the Dow Jones Industrial Average ($DOWI) (DIA) is down by -0.14%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -1.11%.  December E-mini S&P futures (ESZ26) are down -0.80%, and December E-mini Nasdaq futures (NQZ26) are down -1.20%.

Stock indexes are retreating today, with the Nasdaq 100 sliding to a 2-week low, as bond yields rise after US September consumer prices rose more than expected, reinforcing speculation that the Fed will keep interest rates higher for longer amid sticky price pressures.  The 10-year T-note yield is up +5 bp to 5.26%, and the chance for a 25 bp rate hike by the Fed at this month’s FOMC meeting rose to 44% from 22% before the CPI report.  Also, the rout in chipmakers continues today, weighing on the broader market.

US Sep CPI rose +3.7% y/y, stronger than expectations of +3.6% y/y. Sep core CPI rose +2.6% y/y, stronger than expectations of 2.5% y/y.

Stocks and bonds garnered some support today on comments from Fed Vice Chair Michelle Bowman, who signaled she favors keeping Fed policy steady at this month's FOMC meeting when she said, "We have some time to wait and see how financial conditions and the economy evolve before we decide that we need to take any more action" on interest rates.

US MBA mortgage applications fell -2.7% in the week ended October 9, with the purchase mortgage sub-index down -4.0% and the refinancing mortgage sub-index down -0.4%.  The average 30-year fixed-rate mortgage rose +1 bp to a 2.75-year high of 7.50% from 7.49% the prior week.

China's trade news was better than expected, supporting global growth prospects.  China Sep exports rose +36.3% y/y, stronger than expectations of +25.7% y/y and the most in 7 months.  Sep imports rose +31.0% y/y, stronger than expectations of +25.0% y/y.

Stocks have support from the prospect of solid quarterly earnings results starting this week.  Goldman Sachs on Monday raised its three-month view on global equity markets to overweight from neutral, saying. “Earnings growth remains supportive for equities and the recent valuation de-rating has improved asymmetry into the third-quarter earnings season.” According to data compiled by Bloomberg Intelligence, Q3 S&P 500 earnings are expected to climb by +25% from a year earlier, up from a July estimate of 22%. 

Nov WTI crude oil prices (CLX26) are up more than +1% today as Yemen's Houthi rebels launched multiple drone and missile attacks across Saudi Arabia, including energy infrastructure.  Iran has also increased attacks on shipping attempting to transit the Strait of Hormuz, threatening the recent recovery in Middle Eastern energy supplies. 

Markets are discounting a 44% chance of a +25 bp Fed rate hike at the next FOMC meeting on October 27-28.

Overseas stock markets are mixed today.  The Euro Stoxx 50 is up +0.34%.  China's Shanghai Composite closed down -0.89%.  Japan's Nikkei-225 Stock Average closed down -0.05%.

Interest Rates

December 10-year T-notes (ZNZ6) are down by -13 ticks today.  The 10-year T-note yield is up +5.1 bp to 5.259%.  T-note prices retreated today, and yields rose on the stronger-than-expected US Sep CPI report, which boosted the chance of a Fed rate hike later this month to 44% from 22% before the report.  Also, today’s +1% increase in WTI crude oil has raised inflation expectations and is bearish for T-notes.  On the positive side for T-notes today, Fed Vice Chair Bowman said she sees no urgent need for the Fed to raise interest rates.

European government bond yields are mixed today.  The 10-year German bund yield is up +0.7 bp to 3.476%. The 10-year UK gilt yield is down -2.8 bp to 5.419%.

The German Sep wholesale price index rose +8.7% y/y from +6.8% y/y in Aug, the strongest pace of increase in nearly 3.5 years.

Markets are discounting a 13% chance of a +25 bp ECB rate hike at the ECB’s next meeting on October 29.

US Stock Movers

Chipmakers and AI-infrastructure stocks are retreating today, weighing on the overall market.  CoreWeave is down more than -13% to lead losers in the Nasdaq 100.  Also, ARM Holdings Plc (ARM), Lumentum Holdings (LITE), and Marvell Technology (MRVL) are down more than -4%, and Advanced Micro Devices (AMD) and SanDisk (SNDK) are down more than -3%.  In addition, Nvidia (NVDA), Lam Research (LRCX), Microchip Technology (MCHP), Intel (INTC), NXP Semiconductors NV (NXPI), and Western Digital (WDC) are down more than -2%.

Cybersecurity stocks are weaker today, weighing on the overall market. Palo Alto Networks (PANW) is down more than -4%, and Cloudflare (NET) and Okta (OKTA) are down more than -3%.  Also, Crowdstrike Holdings (CRWD), Fortinet (FTNT), and SentinelOne (S) are down more than -2%, and Gen Digital (GEN) and  Zscaler (ZS) are down more than -1%.

Homebuilders and building suppliers are falling today with the jump in the 10-year T-note yield, which raises mortgage rates and undercuts housing demand.  Lennar (LEN) is down more than -4%, and DR Horton (DHI), Pulte Group (PHM), KB Home (KBH), Toll Brothers (TOL), and Builders Firstsource (BLDR) are down more than -3%. 

Cryptocurrency-exposed stocks are sliding today, with Bitcoin (^BTCUSD) down more than -1%.  Iren Ltd (IREN) is down more than -7%, and Circle Internet Group (CRCL), MARA Holdings (MARA), Robinhood Markets (HOOD), and BitMine Immersion Technologies (BMNR) are down more than -5%.  Also, Strategy (MSTR), Riot Platforms (RIOT), and Galaxy Digital Holdings (GLXY) are down more than -4%, and  Coinbase Global (COIN) is down more than -3%. In addition, Bullish (BLSH) is down more than -2%.

Defensive pharmaceutical stocks are climbing today as the overall market declines.  Eli Lilly (LLY) is up more than +3% to lead gainers in the S&P 500, and Amgen (AMGN) is up more than +3% to lead gainers in the Dow Jones Industrials and Nasdaq 100.  Also, Gilead Sciences (GILD), Merck & Co (MRK), Pfizer (PFE), Vertex Pharmaceuticals (VRTX), and Jazz Pharmaceuticals Plc (JAZZ) are up more than +2%.  In addition, Regeneron Pharmaceuticals (REGN) and Ionis Pharmaceuticals (IONS) are up more than +1%.

State Street (STT) is down more than -8% to lead losers in the S&P 500 after reporting Q3 revenue of $4.00 billion, weaker than the consensus of $4.04 billion.

Progressive (PGR) is down more than -7% after reporting Q3 net premiums written of $22.30 billion, below the consensus of $22.50 billion.

Bank of America (BAC) is down more than -7% after reporting Q3 equities trading revenue ex-DVA of $2.51 billion, weaker than the consensus of $2.63 billion. 

Dell Technologies (DELL) is down more than -8%, Hewlett Packard Enterprise (HPE) is down more than -4%, and NetApp (NTAP) is down more than -2% after Barclays downgraded the stocks to equal weight from overweight.

Liquidia (LQDA) is up more than +27% after reaching a global settlement resolving all pending litigation with United Therapeutics.

Accenture Plc (ACN) is up more than +2% after forecasting mid-single-digit revenue growth for fiscal 2027 and 2028.

BlackRock (BLK) is up more than +1% after reporting Q3 revenue of $7.75 billion, better than the consensus of $7.40 billion.

Albemarle (ALB) is up more than +1% after Mizuho Securities upgraded the stock to buy from neutral with a price target of $130.

Earnings Reports (10/14/2026)

Bank of America Corp (BAC), Blackrock Inc (BLK), Fastenal Co (FAST), Morgan Stanley (MS), Progressive Corp/The (PGR), State Street Corp (STT).

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