U.S. stocks were trading mixed Wednesday midday as a decline in Treasury yields weighed on the banking sector but provided some support to shares of large-capitalization technology stocks.
Investors also were awaiting minutes from the Federal Reserve due at 2 p.m. ET and parsing September inflation data that came in slightly hotter than expected, highlighting concerns about a protracted period of rising prices.
How are stock indexes trading?
The Dow Jones Industrial Average
fell 110 points, or 0.3%, at 34,269.
The S&P 500
fell 2 points, or 0.1%, at around 4,347.
The Nasdaq Composite Index
climbed 44 points, or 0.3%, to about 14,511.
What’s driving the market?
A move lower in Treasury yields was causing a mini rotation in equity markets, as investors made shifts within yield-sensitive segments of the market, such as information technology that tend to rise when yields fall and away from banks that benefit when yields are higher.
The decline in Treasury yields, with the 10-year Treasury note
at 1.55%, comes as investors were parsing third-quarter U.S. corporate earnings, as concerns about supply-chain problems and labor shortages threaten to dent corporate profits.
Wall Street also was weighing a closely watched reading on inflation that came in hotter than expected.
Data showed that the U.S. consumer-price index rose 0.4% in September after climbing 0.3% in August, the Labor Department said on Wednesday. In the 12 months through September, the CPI increased 5.4% after advancing 5.3% year-over-year in August.
Excluding the volatile food and energy components, the CPI climbed 0.2% after edging up 0.1% in August, the smallest gain in six months. The so-called core CPI rose 4.0% on a year-on-year basis after increasing 4.0% in August.
Higher prices for food, gasoline and rent drove most of the advance. Economists polled by The Wall Street Journal had forecast a 03% increase in the CPI.
“Wednesday’s still elevated Consumer Price Index marks about 6-months worth of hot inflation data, suggesting that inflation is not as transitory as many investors previously expected,” wrote Nancy Davis, founder of Quadratic Capital Management, in emailed comments on Wednesday.
Corporations have been increasingly mentioning the impact of pricing pressures on earnings updates and investors have been eagerly listening for guidance from C-suite executives on the outlook for inflation.
results were better than Wall Street forecasts on earnings per share as it released another $2.1 billion of loan loss reserves. Its shares, however, were down 2.7%.
Analysts expect S&P 500 index earnings to rise 27.6% annually, a pace markedly slower than a 52.8% gain in the first quarter and 92.4% in the second quarter, which both benefited from favorable comparisons with the start of the COVID-19 pandemic last year. Bank of America has warned that guidance from companies could be ugly amid a “make or break quarter.”
Later on Wednesday, investors will get the latest Federal Open Market Committee meeting minutes. That could “reiterate the Fed’s willingness to start tapering the bond purchases soon and could give a further insight regarding the need and the possibility of seeing the rate normalization happen before 2023,” said Ipek Ozkardeskaya, senior analyst at Swissquote, in a note to clients.
Davis said that Wednesday’s inflation data is unlikely to change the Federal Reserve’s view on tapering, with expectations that the central bank will announce plans to reduce its monthly purchases in November and end buys by the middle of 2022 as it gears up to eventually normalize interest rates.
“The Fed is already expected to announce its tapering plans and the central bank likely wants to preserve optionality with their hiking cycle, Quadratic’s Davis said.
Even so, inflation expectations remain a point of focus for Wall Street.
“We continue to believe that once economic supply and demand is brought back in balance, price pressures should subside,” said Marc Zabicki, Director of Research for LPL Financial.
What companies are in focus?
- Shares of tech giant Apple AAPL fell 1.1% after Bloomberg reported late Tuesday that the tech giant will cut iPhone 13 production due to global chip supply shortages.
Shares of Qualcomm Inc.
rose 1.8% after the chip maker said its board had authorized $10 billion in share repurchases.
Shares of Delta Air Lines Inc.
skid 5.3% after the air carrier reported its first adjusted profit since the COVID-19 pandemic, but said the recent rise in fuel prices will pressure its ability to stay profitable in the fourth quarter.
- BlackRock BLK shares climbed 3.6% after the investment giant reported beats on both profit and revenue expectations and more than 20% growth on assets under management.
How are other assets trading?
The ICE U.S. Dollar Index
a measure of the currency against a basket of six major rivals, fell 0.4%.
U.S. oil futures were higher, with the benchmark
up 0.1% at $80.69 a barrel. Gold futures
rose 2% to $1,794.60 an ounce, but were off the intraday highs.
The Stoxx Europe 600
closed 0.7% higher, while London’s FTSE 100
The Shanghai Composite
rose 0.4%, while Japan’s Nikkei 225
Barbara Kollmeyer contributed reporting