A hotter-than-expected September Consumer Price Index inflation report, combined with a surprising spike in weekly jobless claims, weighed on major stock indices in early New York trading Thursday, while sparking diverging performances among sectors.
Technology and consumer discretionary stocks led the declines, while utilities outperformed, with the latter rebounding from significant losses earlier in the week.
Inflation Tops Estimates, Claims Likely Affected By Hurricane Helene
The annual headline inflation rate dipped slightly from 2.5% in August to 2.4% in September, but came in above economist forecasts of 2.3%.
Despite this marking the sixth consecutive decline in annual inflation, core inflation — which excludes volatile food and energy — rose unexpectedly from 3.2% to 3.3%, marking its first increase since March 2023.
Monthly inflation readings also came in slightly above expectations for both headline and core metrics, though they showed no acceleration from August's growth pace.
With the Federal Reserve's heightened focus on labor market dynamics, markets closely watched the latest jobless claims report, which revealed a surprising jump to 254,000, the highest since July 2023.
Some experts, like Bill Adams, chief economist at Comerica Bank, attributed the spike to temporary disruptions caused by Hurricane Helene and said he anticipates similar effects from Hurricane Milton in the coming weeks.
Overall, the two key data releases pushed the S&P 500 down from record highs reached the previous day while boosting expectations for a 25-basis-point rate cut in November. Notably, market-implied odds of a November rate cut inched up from 76% to 86% after the reports.
Thursday's Sector Movers
| Sector | 1-day % Chg |
|---|---|
| Utilities | 0.81% |
| Energy | 0.46% |
| Real Estate | 0.17% |
| Cons. Staples | 0.02% |
| Financials | 0.01% |
| Materials | 0.01% |
| Health Care | -0.04% |
| Communications | -0.28% |
| Industrials | -0.59% |
| Cons. Discretionary | -0.61% |
| Technology | -0.77% |
Thursday's Stock Movers
Stocks leading gains within the Utilities Select Sector SPDR Fund (NYSE:XLU) included NextEra Energy, Inc. (NYSE:NEE), Duke Energy Corporation (NYSE:DUK) and Eversource Energy (NYSE:ES), up 2.5%, 1.5% and 1.4% respectively.
Dragging down the tech sector, tracked by the Technology Select Sector SPDR Fund (NYSE:XLK), were First Solar, Inc. (NASDAQ:FSLR), down 6.3%, Super Micro Computer, Inc. (NASDAQ:SMCI), down 4.6%, and Enphase Energy, Inc. (NASDAQ:ENPH), down 3.3%.
Tesla Inc. (NASDAQ:TSLA), Ross Stores Inc. (NASDAQ:ROST) and Lululemon Athletica Inc. (NASDAQ:LULU) were the worst performers within the Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY), down 2.8%, 1.7% and 1.5%, respectively.
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