Highlights
Stock indexes slipped on Wednesday after the consumer price report showed higher than expected inflation. The Dow Jones industrial average was flat, the S&P fell 1.1 percent and the Nasdaq dropped 1.9 percent. Bond yields reversed early gains to end lower while the dollar and WTI oil prices rose.
A hotter than expected core inflation reading for September showing prices up 2.6 percent on year versus the 2.5 percent expected sent bond yields higher as markets ratcheted up expectations for a Federal Reserve rate increase as early as October. Stocks did not recover much as yields retreated later in the day as the move down in shorter bond yields appeared to reflect a flight from risk as traders moved out of AI and technology shares into defensive plays like consumer staples. Rising oil prices added to risk aversion as Iranian and Houthi strikes have picked up against oil shipping.
Markets also reacted bearishly to somewhat disappointing quarterly results from BankAmerica, Morgan Stanley and State Street though Blackrock fared better.