NEW YORK – Wall Street’s main indexes closed lower on Oct 10 as investors looked to higher-than-expected inflation and unemployment claims for indications on the health of the US economy and the path for interest rates.
The closely watched Consumer Price Index rose 0.2 per cent on a monthly basis in September and 2.4 per cent on an annual basis, with both figures being slightly higher than estimated by economists polled by Reuters.
The core figure, which excludes volatile food and energy prices, rose 3.3 per cent year-over-year, versus an estimate of 3.2 per cent.
In a separate report released on Oct 10, jobless claims also rose to 258,000 for the week ending Oct. 5, versus an estimate of 230,000.
“Investors were torn between a stronger than expected CPI report and a weaker than expected unemployment claims report,” said Jack Ablin, chief investment officer at Cresset Capital in Chicago. “One showed inflation running hotter than expected and the other showed the economy looking weaker than expected. It’s the worst of both worlds.”
After the economic data, traders were pricing in a roughly 80 per cent probability that the Federal Reserve will cut rates by 25 basis points at its meeting in November and a roughly 20 per cent chance it would leave rates unchanged, according to CME’s FedWatch.
Atlanta Federal Reserve Bank President Raphael Bostic on Oct 10 said he would be “totally comfortable” skipping an interest-rate cut at an upcoming meeting of the US central bank, adding that the “choppiness” in recent data on inflation and employment may warrant leaving rates on hold in November.
Chicago Fed President Austan Goolsbee said he sees “gradual” rate cuts over the next year-and-a-half, while the New York Fed’s John Williams said he still sees rate reductions ahead.
The Dow Jones Industrial Average