Wall Street’s major indexes closed lower on Thursday after a session marked by cautious trading. October’s producer price data weighed on the market, showing inflation rising in line with forecasts. Investors turned their attention to Federal Reserve Chairman Jerome Powell’s upcoming remarks for guidance on interest rate policy.
The Producer Price Index (PPI), measuring wholesale inflation, increased 0.2% month-over-month in October, meeting expectations. However, the annual PPI rise of 2.4% slightly exceeded forecasts, raising concerns about inflation pressures. On a brighter note, initial jobless claims fell by 4,000 to 217,000, below expectations.
Keith Buchanan, senior portfolio manager at Globalt Investments, noted the data supports a “soft landing” scenario for inflation and employment trends. He cautioned, though, that rising Treasury yields could challenge that outcome.
Treasury Yields Rise, Market Sentiment Shifts
The U.S. 10-year Treasury yield climbed to its highest level since July, reflecting inflation expectations. This prompted traders to lower the odds of a December rate cut by the Federal Reserve. The CME FedWatch tool showed a 79.1% chance of a 25-basis-point reduction, down from 82% before the data release.
Major indexes reflected the cautious mood. The Dow Jones Industrial Average dropped 36.90 points, or 0.08%, to 43,921.29. The S&P 500 fell 9.36 points, or 0.16%, to 5,976.02, and the Nasdaq Composite lost 34.83 points, or 0.18%, to 19,195.90. Walt Disney’s 10.4% surge, following strong earnings, helped limit Dow losses.
Technology and growth stocks, sensitive to interest rate changes, faced notable declines. Tesla and Alphabet dropped over 1%, and the real estate sector was the weakest performer on the S&P 500.
Investors Await Powell’s Remarks
Fed Chairman Jerome Powell’s upcoming speech in Dallas could provide clarity on interest rate direction. Recent Fed comments highlighted concerns about lingering inflation risks despite progress toward employment and inflation targets.
Fed Governor Adriana Kugler acknowledged significant progress on inflation but warned of ongoing challenges. Traders are also assessing potential inflation risks tied to policies from President-elect Donald Trump’s administration.
Sector Highlights and Corporate News
Cryptocurrency-related stocks performed well as Bitcoin prices rose. Marathon Digital gained 2.6%, and MicroStrategy rose 4.6%, buoyed by optimism about favorable regulatory policies under the Trump administration.
In corporate news, Tapestry’s stock surged 8.8% to a 10-year high after canceling its $8.5 billion Capri Holdings acquisition. The decision followed a U.S. judge blocking the deal, leading to a 4.2% drop in Capri’s shares.
On the broader market, advancing stocks outpaced decliners with a 1.29-to-1 ratio on the NYSE and 1.12-to-1 on the Nasdaq. The S&P 500 recorded 16 new 52-week highs and 6 new lows, while the Nasdaq posted 37 highs and 61 lows.
Investors look forward to additional insights from Fed officials, including New York Fed President John Williams, on future monetary policy.
