New York Stock Market Mixed in Early Trading Near Flat... September CPI 'Exceeds Expectations'

September CPI Up 2.4% Year-on-Year
Last Week's Unemployment Claims Highest in 14 Months
88% Chance of November Small Rate Cut Reflected

The three major indices of the U.S. New York stock market showed mixed movements within a narrow range on the 10th (local time). After inflation exceeded expectations and employment indicators showed a slowdown, investors are trying to gauge the U.S. economic situation and the future path of interest rates, resulting in little market movement.

As of 12:22 PM in the New York stock market, the blue-chip-focused Dow Jones Industrial Average was down 0.04% from the previous trading day, standing at 42,494.54. The large-cap-focused S&P 500 index rose 0.04% to 5,794.28, and the tech-heavy Nasdaq index increased 0.18% to 18,325.42.

The U.S. Consumer Price Index (CPI) for September, released earlier that day, rose 2.4% year-over-year. This was lower than the 2.5% increase in August but exceeded market expectations of 2.3%. The core CPI increased 3.3% compared to a year ago, also surpassing expert forecasts of 3.2%. Rising food and housing costs pushed the CPI higher.

Luke O'Neill, portfolio manager at Cookson Purs, said, "The market today is being driven by the CPI report," adding, "It's not a big surprise, but as the core CPI came out a bit hotter, investors are selling small- and mid-cap stocks that are somewhat sensitive to interest rates."

However, the overall inflation trend is analyzed to be slowing toward the Federal Reserve's target of 2%.

Austin Goolsby, president of the Federal Reserve Bank of Chicago, said in an interview with CNBC immediately after the September CPI release, "What matters is not the day-to-day fluctuations but the overall trend," and added, "Looking at the overall trend over 12 to 18 months, inflation has dropped significantly, and the job market has cooled to a level we consider full employment."

Separately, the U.S. Department of Labor reported that employment is gradually slowing. According to the Labor Department, initial jobless claims for the week of September 29 to October 5 increased by 33,000 from the previous week to 258,000, marking the highest level since August last year. The number exceeded expert expectations of 231,000 by 27,000 due to the impact of Hurricane Helen.

Although inflation indicators slightly exceeded expectations, the easing trend continues, and the labor market is also gradually slowing, leading the market to anticipate that the Federal Reserve may cut interest rates by 0.25 percentage points in November. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market reflects an 88.4% probability that the Fed will cut rates by 0.25 percentage points at the Federal Open Market Committee (FOMC) meeting next month. This is up about 8 percentage points from 80.3% the previous day. Conversely, the probability of holding rates steady fell from 19.7% the previous day to 11.6% on this day.

Anna Wong, an economist at Bloomberg Economics, said, "Despite the surprise rise in core CPI, the FOMC will not change its view that inflation is on a downward trajectory," and predicted, "The FOMC is expected to cut rates by 0.25 percentage points in November."

By individual stocks, Domino's Pizza is down 0.24% following its annual sales forecast adjustment this year. U.S. pharmaceutical company Pfizer fell 2.22% after activist investor Starboard Value threatened legal action against two former Pfizer executives.

Government bond yields showed mixed movements. The U.S. 10-year Treasury yield, a global bond yield benchmark, rose 1 basis point (1 bp = 0.01 percentage points) to 4.08% compared to the previous trading day, while the 2-year Treasury yield, sensitive to monetary policy, fell 4 basis points to 3.97%.

International oil prices are rising due to supply concerns caused by Hurricane Milton's landfall in Florida and instability in the Middle East. West Texas Intermediate (WTI) crude oil rose $1.48 (2%) from the previous trading day to $74.72 per barrel, and Brent crude, the global oil price benchmark, jumped $1.62 (2.1%) to $78.20 per barrel.