Stocks fall, yields rise as inflation data comes in hotter than expected

October 12, 2023

Stocks fell in the US today as newly released inflation data overshot expectations. The Dow Jones Industrial Average fell by 173.73 points (0.51%), to 33,631.14. The S&P 500 declined by 27.34 points (0.62%), ending the day at 4,349.61. The tech-heavy Nasdaq index lost 85.46 points (0.63%), declining to 13,574.22.

One-day S&P 500 chart for 10-12-2023. Source: MSN Money.

At 8:30 am ET, the US Bureau of Labor Statistics released Consumer Price Index data for the month of September. It showed that prices increased 0.4% over the course of the month and 3.7% in the year preceding October 1. This was higher than the 0.3% for the month and 3.6% year-over-year estimated by Dow Jones. Traders interpreted the higher-than-expected figure as bearish for equities, as it could imply that the Federal Reserve will need to keep interest rates elevated for longer than previously expected as they attempt to keep inflation under control.

Despite this decline in the overall market, shares of some retail-sector companies did unusually well. Wallgreens gained 7% after it reported that its losses had not been as great as previously expected, and Dollar General stock surged by nearly 10% after-hours as the company announced that former CEO Todd Vasos will return to the company.

US Treasury yields rose as traders digested the new inflation data. The 10-year note gained 0.102 points, reaching 4.699%. The two-year gained 0.066 points, rising to 5.071%.

Gold fell by $6.52 per Troy Ounce, to 1,868.93. Gold has been trending down since May 4, when it peaked at $2,060.60. Since then, concerns about rising interest rates and a strong dollar have kept the yellow metal in decline.

Caption: Gold price since May, 2023. Source: Apmex.

Oil gained slightly today, with West Texas Intermediate adding a penny per barrel (0.012%) to its price to reach $83.50. Brent crude gained $0.56 (0.65%) per barrel to reach $86.38.

In the forex market, the US Dollar Index rose 0.76 points, to 106.58. The euro fell 0.85% to $1.0528. The yen fell 0.47%, causing the number of yen needed to buy a dollar to rise to 149.7720. Many traders believe that Japanese monetary authorities will intervene if this number rises above 150.

Information for this news item was sourced from Apmex, CNBC, MSN Money, Yahoo Finance, and Business Insider.

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