Stubborn Inflation and Rising Jobless Claims Keep U.S. Market Indexes In Check

Barry Adams
10 Oct, 2024
New York City

Stocks on Wall Street headed lower after consumer price inflation was ahead of market expectations and initial jobless claims soared.

The S&P 500 index edged down 0.2% and the Nasdaq Composite declined 0.4% on the worry that the Federal Reserve may slow down its rate-cut cycle following the stubborn inflation report. 

Despite the Fed's eleven rate hikes over 2022 and 2023, inflation has not dropped near the target rate of 2%, indicating rates are still not restrictive enough. 

Overall inflation has been moderating since June 2022, but that decline is largely reflecting the fall in energy prices, which are not impacted by the Fed's policy decisions. 

 

CPI and Core CPI Diverged In September

Consumer price inflation slowed to 2.4% in September, the sixth consecutive month of decline, the U.S. Bureau of Labor Statistics reported Thursday. 

Overall inflation dropped to the lowest level since February 2021. 

The decline in inflation largely reflected the weakness in energy prices, and energy costs fell at a faster pace of 6.8% compared to 4.0% in the previous month. 

The cost of shelter rose at a slower pace of 4.9% compared to 5.2% in the previous month. 

However, food inflation accelerated to 2.3% from 2.1%, and transportation jumped to 8.5% from 7.9%. 

Core inflation edged up to 3.3% in September after staying at a three-year low of 3.2% in the previous two consecutive months.

 

Hurricane and Michigan Layoffs Drive Weekly Jobless Claims Higher

In other economic news, initial jobless claims rose by 33,000 to 258,000 for the week ending October 5, the Department of Labor reported Thursday. 

Initial jobless claims increase was driven by the increase in claims in Florida by 3,842 and North Carolina by 8,534 following the widespread damages caused by Hurricane Helena. 

Moreover, large-scale layoffs in Michigan, driven by 10,667 job losses in manufacturing and management over the past two weeks, also contributed to the increase in weekly claims. 

Continuing claims, which lag by one week, rose 42,000 to 1.861 million. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index decreased 0.2% to 5,779.49, the Nasdaq Composite fell 0.4% to 18,213.09, and the Russell 2000 index declined 1.1% to 2,174.50.

The yield on 2-year Treasury notes edged lower to 3.98%, 10-year Treasury notes inched up to 4.07%, and 30-year Treasury bonds inched higher to 4.36%.

WTI crude oil increased $0.90 to $74.14 a barrel, and natural gas prices edged down 3 cents to $2.62 a thermal unit.

Gold fell by $10.40 to $2,611.10 an ounce, and silver increased by $0.14 to $30.64.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 102.90.

 

U.S. Stock Movers

Delta Air Lines declined 0.2% to $50.72 after the company's forward-looking outlook disappointed some investors. 

Revenue in the third quarter increased 1% to $15.7 billion from $15.5 billion, net income increased 15% to $1.3 billion from $1.1 billion, and diluted earnings per share rose to $1.97 from $1.92 a year ago. 

The airline said the direct revenue impact caused by the CrowdStrike-caused outage on August 8 was about $380 million, and the fuel expense was $50 million lower because of 7,000 flight cancellations over the five-day period. 

Hurricane Milton exited from the Florida East Coast, leaving behind a wave of destruction, flash flooding, and power outages for at least 3 million residents. 

Universal Insurance, which primarily provides catastrophic insurance in Florida, rose 10.9% to $10.82.

Other property insurance companies with significant Florida exposures rebounded after falling in the previous three consecutive sessions. 

Allstate Corp. increased 1.2% to $187.26, Fidelis Insurance jumped 2.2% to $17.90, and Progressive Corp. gained 0.9% to $252.82. 

Generac Holdings declined 2.8% to $167.36, and the generator provider had run up as much as 11% over the last three days as Hurricane Milton had intensified.