U.S. Major Averages Headed Lower After Core Inflation Stayed Above Fed's Target

Barry Adams
11 Sep, 2024
New York City

U.S. benchmark indexes slipped in early trading as investors reviewed the inflation report and searched for clues about the health of the broader economy. 

The S&P 500 index decreased 0.1% and the Nasdaq Composite dropped 0.2% after consumer price inflation matched market expectations. 

Consumer price inflation in August slipped for the fifth month in a row to 2.5%, largely because of the weakness in energy prices, the Bureau of Labor Statistics reported Wednesday. 

Energy costs declined 4% compared to a rise of 1% in the previous month, overshadowed by the increase in housing inflation to 5.2% from 5.1% in July. 

On a monthly basis, inflation held steady at 0.2%, matching the rate in the previous month, driven by a 0.5% rise in shelter costs. 

Core inflation, which excludes volatile food and energy prices, steadied at a three-year low of 3.2%, indicating slow progress in weakening well-anchored inflation. 

After the inflation report, investors still held out for at least a 25 basis points rate cut next week. 

Despite the widely anticipated rate cut, inflation is well-anchored in the economy, and rates are far from restrictive, as the U.S. economy is still adding jobs above the long-term average and GDP is expanding at a faster rate than 2%. 

Moreover, an interest rate cut is not likely to alter the long-term structural issues with the economy, international trade competitiveness, widening inequality, and entrenched poverty. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index decreased 0.3% to 5,486.63, the Nasdaq Composite eased 0.4% to 16,960.21, and the Russell 2000 index fell 0.1% to 2,095.90. 

The yield on 2-year Treasury notes edged lower to 3.59%, 10-year Treasury notes inched down to 3.62%, and 30-year Treasury bonds inched lower to 3.93%.

WTI crude oil decreased $1.51 to $67.25 a barrel, and natural gas prices edged up 4 cents to $2.27 a thermal unit.

Gold rose by $3.15 to $2,518.74 an ounce, and silver increased by $0.36 to $28.80.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 101.43.

 

U.S. Stock Movers

GameStop Corp. dropped 11% to $20.86, and the video game retailer reported sharply lower revenue in its latest quarter. 

Revenue in the second quarter dropped more than 20% to $798 million from $1.16 billion; net income was $14.8 million compared to a loss of $2.8 million; and diluted earnings per share were 4 cents compared to a loss of 1 cent. 

The company also announced the sale of up to 20 million shares at an "at-the-market" price. 

Dave & Buster's jumped 14% to $34.13 after the entertainment company reported better-than-expected quarterly results. 

Revenue in the second quarter ending on August 6 gained 2.8% to $557.1 million, net income jumped to $40.3 million from $25.9 million, and diluted earnings advanced to 99 cents from 60 cents a year ago. 

Comparable store sales declined 6.3% from the same calendar period in the year earlier. 

Petco Health and Wellness jumped 7.2% to $3.20, and the pet food retailer reported revenue meeting investor expectations. 

Revenue declined 0.5% to $1.52 billion, net loss expanded 70% to $24.8 from $14.6 billion, and diluted earnings per share rose 66% to 9 cents from 5 cents.