Stocks Struggle After Fed's Core Inflation Gauge Advances

Barry Adams
30 Sep, 2022
New York City

Stocks on Wall Street turned lower after the release of the latest inflation report. 

The hotter-than-expected inflation, the preferred measure by the Federal Reserve, was the second signal in as many days indicating that elevated inflation is here to stay despite the five rate hikes in six months. 

The personal consumption expenditure price index rose 0.3% in August after falling 0.1% in July, Bureau of Economic Analysis said Friday. 

On a monthly basis, prices for goods declined 0.3% and for services rose 0.6% in August. Energy prices declined 5.5% but food prices rose 0.8%.  

The PCE price index, excluding food and energy, rose 0.6% on a monthly basis. 

The PCE price index on an annual basis increased 6.2%, slower than 6.4% in July but still elevated and significantly ahead of Fed's target rate of 2%. 

Core rate of inflation, excluding food and energy, rose 4.9% in August from a year ago and jumped 0.6% on a monthly basis. 

The yield on 2-year Treasury notes held stable at 4.19%, 10-year Treasury notes edged down to 3.73% and 30-year bonds traded near 3.76%.  

Immediate month delivery futures of crude oil declined $1.03 to $88.06 a barrel and natural gas fell 7 cents to $6.80 a thermal unit. 

The S&P 500 index fell 0.24% to 3,632.11 and the Nasdaq Composite index was nearly unchanged at 10,737.58. 

 

Eurozone Record Double Digit Inflation In September 

European markets traded lower after the release of eurozone inflation data. 

Consumer prices rose at the fastest annual pace 10.0% in September after rising at 9.3% in August, the Eurostat said Friday. 

The inflation rate in September increased to 1.2% from the previous month 

Inflation accelerated for the fifth month in a row and show no signs of easing, raising pressure on the central bank to lift rates. 

Food, tobacco and beverages prices accelerated to 11.8% from 10.6% in August, energy prices rose 40.8% from 38.6% and services increased 4.3% from 3.8%. 

Among the larger member countries in the eurozone, Germany recorded the largest inflation rate of 10.9% in September from 8.8% in September, followed by Italy with 9.5% compared to 9.1% but the rate slowed in France to 6.2% from 6.1% and in Spain to 9.3% from 10.5%.  

Prices in Estonia, Latvia and Lithuania surged between 22% and 24.5% in the month on an annual basis. 

 

Euro Area Stocks Third Quarterly Loss In a Row 

European markets are set close down for the third quarter in a row for the first time since early 2011. 

The DAX index trimmed earlier gains to 0.5% to 12,041.53, the CAC-40 index added 0.6% to 5,712.21 and the FTSE 100 index fell 0.3% to 6,858.61. 

For the quarter, the DAX is set to close down 6%, the CAC-40 down 3% and the FTSE 100 index down 4%.