Inflation and unemployment reports cool US stocks | The Arkansas Democrat-Gazette

NEW YORK – U.S. stocks edged back from record highs on Thursday after reports showed inflation was slightly higher than expected last month and more workers filed for jobless benefits last week.

The S&P 500 slipped 0.2% and the Dow Jones Industrial Average fell 57 points, or 0.1%, after also hitting an all-time high the previous day. The Nasdaq Composite fell slightly by 0.1%.

Stock prices had surged in large part on excitement over the record interest rate cut, now that the Federal Reserve is cutting them as it broadens its focus on keeping the economy afloat rather than just tackling high inflation.

Lower interest rates slow the economy and stimulate investment prices. However, the pace of further rate cuts will depend on whether inflation continues to fall toward the Fed’s 2 percent target.

Thursday’s report showed inflation according to the consumer price index slowed to 2.4% in September from 2.5% in August, but economists expected an even steeper decline to 2.3%. And ignoring fluctuations in food, gasoline and other energy prices, the underlying trends that economists say may be a better indicator of where inflation is headed were slightly hotter than expected.

At the same time, a separate report showed that 258,000 U.S. workers filed for unemployment benefits last week. That number is relatively low by historical standards, but the acceleration was stronger than economists expected. Hurricane Helene and a strike by Boeing workers may have contributed to the numbers looking worse.

In the bond market, Treasury yields rose immediately after the economic data release, but then fluctuated up and down as traders tried to cover up what it would all mean for the Fed.

The yield on the 10-year Treasury note remained at 4.07%, the level seen late Wednesday. The two-year Treasury yield, more in line with Fed expectations, fell to 3.96% from 4.02% late Wednesday.

According to CME Group, traders remain overwhelmingly confident that the Fed will cut interest rates by the traditional amount of a quarter percentage point at its next meeting. However, some are sticking to the bet that the federal funds rate could remain unchanged in November. This came after many traders called for an above-average cut of half a percentage point earlier this month, before a series of stronger-than-expected economic data dashed those calls.

“Unless the jobs report out Nov. 1 shows a dramatic decline in employment,” a traditional quarter-percentage point cut “could even seem a little aggressive,” said Brian Jacobsen, chief economist at Annex Asset Management.

On Wall Street, shares of Toronto-Dominion fell 5.3% after the company made a $3.09 billion payment as part of a resolution to the U.S. investigation into TD Bank’s money laundering compliance programs had agreed. The company also agreed to cap growth at two U.S. bank subsidiaries.

Shares of Delta Air Lines fell 1.1% after summer results were weaker than analysts expected. The company said leisure bookings were strong but expects air travel to decline around the election.

Meanwhile, oil prices rose to recoup their sharp decline from earlier in the week. A barrel of Brent crude rose 3.7% to trade at $79.40. A barrel of U.S. crude rose 3.6% to $75.85.

This helped energy stocks rise, limiting losses in U.S. stock indexes. Shares of Exxon Mobil rose 0.9% and were one of the strongest forces pushing the S&P 500 higher, while shares of Valero Energy rose 2.4%.

Overall, the S&P 500 slipped 11.99 points to 5,780.05. The Dow fell 57.88 to 42,454.12 and the Nasdaq Composite lost 9.57 to 18,282.05.

In overseas stock markets, Hong Kong’s Hang Seng rose 3% in its recent sharp rise.

After rising on hopes of stimulus to support the world’s second-largest economy, Chinese stocks slumped earlier this week amid disappointment that more stimulus would not be forthcoming. But there is still hope for more to come.

Information for this article was contributed by Yuri Kageyama and Matt Ott of The Associated Press.