US stocks slide as investors weigh Fed minutes and earnings

U.S. stocks closed lower for a sixth straight day on Wednesday as a combination of hot inflation data, the start of corporate earnings season and minutes from the Federal Reserve’s latest meeting led to a choppy trading day.

Minutes from last month’s meeting, when the central bank raised its benchmark interest rate by 0.75 percentage points, highlighted policymakers’ commitment to bringing inflation down, “many officials claiming that “the cost of taking too little action . . . likely outweighed the cost of taking too much action.”

However, they also acknowledged concerns about the bleak economic outlook: a minority of officials favored “calibrating” the pace of rate hikes to minimize the negative economic impact.

Wall Street’s benchmark, the S&P 500, ended the day down 0.3% to a two-year low, reversing gains made shortly after the minutes were released.

The Nasdaq Composite, which is dominated by high-growth technology stocks seen as particularly sensitive to higher interest rates, fell 0.1%.

Treasury prices also rose slightly. The yield on the 10-year Treasury note, which falls when prices rise, fell 0.04 percentage points to 3.90%.

Bob Miller, head of Americas fundamental fixed income group at BlackRock, said the minutes “reinforced the overall hawkish message” issued last month.

“While we expect the Fed to take a more deliberate approach and consider pausing at times over the next six months, it’s probably too early for the Fed to consider pain relief right away,” he said. he declared.

Markets struggled to orient themselves earlier in the day as investors digested warmer-than-expected U.S. producer inflation data and looked ahead to the third-quarter earnings season.

The producer price index, which tracks the prices companies receive for their goods and services, rose 8.5% on the year to September, from 8.7% in August but above of the 8.4% expected by economists. Month-over-month, prices received by U.S. producers for their goods and services rose 0.4%, above consensus expectations for growth of 0.2% and well above a contraction of 0.2% recorded in August.

Investors have been scouring inflation data for clues about how vigorously the Federal Reserve and its global peers will tighten monetary policy. Signs of still-high price growth have fueled fears that the U.S. central bank may raise interest rates more aggressively, going so far and so fast that it worsens an economic slowdown.

Those worries weighed heavily on equity markets, with the S&P 500 in September wrapping up its longest streak of quarterly losses since the 2008 financial crisis.

Markets are pricing in expectations that the Fed will implement another three-quarter point hike at its November meeting, following three consecutive 0.75 percentage point hikes. Its current target range is between 3 and 3.25%.

Wednesday’s PPI report will be followed by a widely expected consumer price index for September on Thursday, with economists polled by Reuters expecting an 8.1% rise. This figure would mark a slight slowdown in the annual inflation rate from 8.3% in August.

As the U.S. earnings season kicks off this week, investors are watching closely for evidence of how consumers and businesses are handling high prices and rising borrowing costs.

PepsiCo on Wednesday underscored lingering inflationary pressures by saying it had raised prices again and was open to further increases. Shares of the company rose 4.2% as it improved its outlook and said consumer demand remained resilient.

The focus will shift to the financial sector later in the week, with reports expected from a host of major groups including JPMorgan, Morgan Stanley and BlackRock.

Elsewhere in the stock markets, the European regional Stoxx 600 gauge closed down 0.5%. Hong Kong’s Hang Seng lost 0.8%.