Tech leads stocks lower after hot September CPI

(AWP Alliance News) - Shares ended lower in New York on Wednesday after September consumer price inflation came in hotter than forecast, while oil remained elevated as attacks in the Middle East escalated.

The Dow Jones Industrial Average closed down 48.62 points, 0.1%, at 51,621.48. The S&P 500 fell 86.51 points, 1.1%, to 7,718.94. The Nasdaq Composite ended down 511.51 points, 1.9%, at 26,692.87.

"Stock markets are taking the US inflation figure very much as one would expect...A resurgent US dollar has hit sterling and the euro hard...We can expect the Democrats to shout from the rooftops about rising prices as the clock ticks down to the mid-terms, while European investors will watch anxiously to see if similar signs are appearing in their own inflation figures," said IG Chief Market Analyst Chris Beauchamp.

"October is once again very much a live month for the Fed, after a seesaw few weeks that has seen the chances of an October move gyrate wildly. The resurgent dollar and revived bond yields have meant doom for precious metals and bitcoin, with the selling in silver particularly brutal. No one wants to hold these in a world of rising rates, though in fairness to bitcoin it is still much higher than in August whereas precious metals continue to plumb new depths," Beauchamp added.

The consumer price index rose 3.7% year-on-year in September, accelerating from 3.4% in August and exceeding the FXStreet-cited consensus of 3.6%, according to figures released by the Bureau of Labor Statistics on Wednesday.

On a monthly basis, consumer prices increased 0.6%, following a 0.4% rise in August and matching FXStreet expectations.

The acceleration was largely driven by higher energy costs, with the energy index rising 5.2% month-on-month after increasing 2.1% in August. Gasoline prices jumped 9.1%, accounting for more than half of the monthly increase in headline inflation.

On an annual basis, energy prices rose 20.4%, with gasoline prices surging 34.2%.

Core inflation, which excludes volatile food and energy prices, accelerated to 2.6% year-on-year in September from 2.4% in August, exceeding FXStreet consensus expectations of 2.5%.

On a monthly basis, core prices rose 0.3%, matching August's increase but above FXStreet expectations of a 0.2% rise.

Chipmakers struggled on Tuesday as chipmaker ASML reported third-quarter revenue below analyst expectations. The stock slid 3.9%.

Nvidia dropped 3.2%, AMD sank 5.7% and Broadcom lost 3.1%.

AEP on Wednesday said it plans to invest about USD4 billion to develop a 702-megawatt power plant in Wyoming to supply Alphabet's Google.

AEP closed up 0.4%. Alphabet dropped 1.7%.

Bank of America on Wednesday said it has set aside "billions of dollars" to tackle finance crime as a USD1.2 billion fine marred its third quarter earnings.

On Tuesday, the US Treasury Department said that it was imposing penalties of more than USD1.2 billion on the bank, which it said failed to properly report more than USD5 billion in "suspicious transactions."

The charge saw Bank of America report lower third quarter earnings, while reduced investment banking fees and sales & trading revenue also took their toll.

Bank of America said net income fell 17% to USD6.93 billion in the three months ended September 30 from USD8.33 billion the year prior. Diluted earnings per share declined 13% to USD0.91 from USD1.04, below the USD1.10 LSEG estimate.

BofA closed down 4.8%.

Meanwhile, Morgan Stanley reported third-quarter revenue and earnings ahead of market expectations. But the stock slid 2.8% as fixed income trading revenue and investment banking revenue missed consensus estimates.

A barrel of Brent fetched USD106.10 late Wednesday, down slightly from USD106.14 on Tuesday. West Texas Intermediate rose to USD95.18 from USD94.61.

At least ten vessels have been attacked in or near the Strait of Hormuz since Sunday, a high since the Middle East war began in February, security firm Vanguard, the International Maritime Organization and the British maritime agency UKMTO said Wednesday.

The report came as explosions shook the Saudi capital of Riyadh. Hours earlier, Yemen's Houthis had struck a building in the area housing Aramco's operations centre.

"Persistent risks around the Strait of Hormuz and the stalled US-Iran diplomatic track continue to provide support," the ICM.com analyst said, adding: "The lack of progress leaves little immediate prospect of a full reopening of the waterway," said Firas Bechwaty, head of business development at ICM.com.

Ukraine on Wednesday accused the US of helping Russia by failing to warn it of incoming missile strikes and hobbling Kyiv's military response through changes to SpaceX's Starlink system it uses on the battlefield.

Former Ukrainian defence minister Mykhailo Fedorov later said that "Starlink's operation at speeds up to 160 km/h is being restored."

Musk's SpaceX ended down 2.8%. Tesla fell 2.2%

A senior official in Kyiv confirmed to AFP on Wednesday that the US had in recent days threatened to stop providing intelligence about Russian missile launches that Ukraine uses to thwart attacks. Trump denied doing so on Tuesday.

The yield on the 10-year US Treasury was at 5.19% late Wednesday, down from 5.22% on Tuesday. The 30-year yield fell to 5.52% from 5.57%.

Against the dollar, the euro was at USD1.1156, down from USD1.1198. on Tuesday. Sterling fell to USD1.3190 from USD1.3253. Against the yen, the dollar was at JPY158.29 down from JPY158.37.

Gold fell to USD4,101.18 an ounce from USD4,164.62.

In Europe, the FTSE 100 closed up 0.7% in London. The DAX 40 in Frankfurt gained 0.2%. The CAC 40 rose 0.6% in Paris.

In China, the Shanghai Composite Index fell 0.9%. The Hang Seng Index in Hong Kong closed down 0.1%, as did the Nikkei 225 in Tokyo. The S&P/ASX 200 ended down 0.6% in Sydney.

Thursday's corporate calendar has third quarter results from Ericcson, Gerresheimer and Nordea Bank.

The global economic calendar has US retail sales, initial jobless claims and the producer price index.

By Aidan Lane, Alliance News reporter

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