Rising rental costs pushed the consumer price index higher last month, and Wall Street showed its fears.
During the opening trading hours of Thursday, October 12th, Wall Street was slightly lower. On the other hand, crude oil prices posted a total 10% decline this week, lowering their range price to $82 per barrel.
On Thursday morning, the Bureau of Statistics released its consumer price index for September. Shockingly, the indexes came in higher than previous expectations, which dragged stock prices down. The report is likely to push a Federal Reserve official into keeping interest rates higher.
In the week ending October 7th, jobless claims in the United States increased by 209,000, which was slightly below the anticipated rise of 210,000. This data had an impact on the financial markets, leading to a rise in U.S. 10-year benchmark yields to 4.725%, following two consecutive days of decline. The 30-year fixed mortgage rate jumped by 2.84%, while the 5-year bonds rose by 2.09%. Consequently, sectors like real estate, consumer staples, and utilities, typically seen as bond proxies, experienced significant declines in the S&P 500. In contrast, the energy and information technology sectors were among the notable performers.
Keeping with the CPI report, experts explain that this increase is a direct cause of the increasing rental costs last month. Undoubtedly, rental costs increased massively last month. Between increasing jobless claims and a tight economy, it is logical to see this increase. As businesses struggle to keep or maintain their monthly profits,
David Russell, global head of market strategy at TradeStation, commented on the report early this morning and said, “Headline inflation was a little hot because of energy, but core prices remained subdued. He added, “This number isn’t great for the bulls but also doesn’t give much reason to be bearish.”
Meanwhile, on Wall Street, the three main indexes dipped lower in today’s session. The S&P 500 benchmark was down by 0.98% to 4,334 basis points, and the Nasdaq Commodity fell by 0.98% to 13.445 basis points. As for the two indexes, The S&P index registered 17 new 52-week highs and 27 new lows, while the Nasdaq recorded 31 new highs and 223 new lows.
As for the Dow Jones average industrial, the feature declined by 0.81% to 33.532 basis points.
Elsewhere, China’s sovereign wealth fund, Central Huijin Investment, has increased its holdings in the country’s top four banks, including the Bank of China, for the first time since 2015. This move has raised expectations that Chinese authorities might intervene to stabilize the stock market amidst a global fund outflow. Beijing is considering economic stimulus measures and potentially increasing the 2023 budget deficit by issuing more sovereign debt. Analysts believe Huijin’s modest investments aim to support share prices. Consequently, Chinese banking stocks have risen, and the CSI 300 Index increased by 0.9%, indicating renewed investor confidence in China’s financial stability.
Meanwhile, West Texas Intermediate fell to a market barrel price of $82, while Brent oil was down to $85 per barrel.