[New York Stock Market] Mixed Close Due to PCE Inflation and Middle East Risks... Dow Down 1.12%

The New York stock market showed mixed results, reflecting the Federal Reserve's (Fed) preferred inflation indicator, tech company earnings, and Middle East risks.

On the 27th (Eastern Time), at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 32,417.59, down 366.71 points (1.12%) from the previous session.

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The Standard & Poor's (S&P) 500 index fell 19.86 points (0.48%) to 4,117.37, while the Nasdaq index rose 47.41 points (0.38%) to 12,643.01.

The Nasdaq index had declined over the past two days but rebounded on the day as Amazon's third-quarter earnings showed strong performance.

Investors focused on corporate third-quarter earnings and the Fed's preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index.

According to the Department of Commerce, the core PCE price index, which excludes volatile energy and food prices, rose 0.3% month-over-month in September and increased 3.7% year-over-year. This matched both the market expectations compiled by The Wall Street Journal (WSJ). The month-over-month figure was steeper than August's 0.1% increase, marking the highest since May, while the year-over-year figure slowed from 3.8% the previous month.

The overall PCE price index, including energy and food prices, rose 0.4% month-over-month and 3.4% year-over-year in September, remaining at the same levels as the previous month.

Personal consumption expenditures in September increased by 0.7% compared to the previous month, exceeding the WSJ forecast of 0.5% and improving from the prior month's 0.4% increase.

This reconfirmed that consumption, the growth engine of the U.S. economy, remains robust.

The previously released U.S. fourth-quarter Gross Domestic Product (GDP) growth rate was also recorded at 4.9%, supported strongly by consumption, the growth driver.

However, doubts arose about whether this growth momentum can be sustained.

The Atlanta Federal Reserve Bank's GDPNow, which recently forecasted third-quarter GDP growth at 5.4%, lowered its estimate for the fourth-quarter U.S. GDP growth rate to 2.3%.

Expected inflation rose further. The University of Michigan announced that the one-year expected inflation rate for October rose to 4.2%, the highest level since May 2023. This exceeded the preliminary figure of 3.8% and surged sharply from the previous month's 3.2%. The five-year long-term expected inflation also increased to 3.0% from 2.8% the previous month.

The final consumer sentiment index for October was 63.8, down from 67.9 the previous month, marking the lowest level in four months.

By individual stocks, Amazon rose over 6% as both third-quarter net income and revenue exceeded expectations, and Meta Platforms (Facebook) also rose over 2%. Alphabet, Google's parent company, saw a slight decline in its stock price. Intel surged over 9% after reporting net income and revenue that beat expectations due to strong PC demand. Ford plunged over 12% following news that its quarterly net income fell short of expectations and it withdrew its annual guidance. ExxonMobil fell 1% despite increasing dividends, as its net income was less than half of the same period last year. Chevron dropped over 6% after its net income missed expectations.

According to the Chicago Mercantile Exchange (CME) FedWatch, the probability that the Fed will keep the benchmark interest rate unchanged in November was 97.4% at the close. The likelihood of a rate hold at the December meeting was 78.6%, while the chance of a 0.25 percentage point rate hike was 19.3%.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) rose 0.59 points (2.85%) to 21.27 compared to the previous session.