NEW YORK: US stocks declined Wednesday as Treasury yields climbed following hotter-than-expected annual inflation data for September, weighing on investor sentiment amid elevated oil prices and the start of the third-quarter earnings season.
The S&P 500 fell 0.6%, while the Nasdaq Composite dropped 0.8%. The Dow Jones Industrial Average was relatively resilient, losing 32 points, or 0.1%, supported by gains in healthcare stocks, including UnitedHealth and Amgen.
The consumer price index rose 0.6% in September from the previous month, matching economists’ expectations. However, annual inflation accelerated to 3.7%, exceeding the 3.6% increase forecast by economists surveyed by Dow Jones.
Core CPI, which excludes food and energy, increased 0.3% month over month and 2.6% year over year. Both figures were slightly above expectations of 0.2% and 2.5%, respectively.
Treasury yields rose after the inflation report. The 10-year Treasury yield climbed more than 7 basis points to 5.293%, while the 30-year yield gained more than 4 basis points to 5.609%. Both yields had reached 24-year highs the previous week.
Jeff Schulze, head investment strategist at the Franklin Templeton Institute, said the inflation figures could create a headwind for risk assets by increasing expectations of near-term interest rate hikes. Higher long-term yields could also strengthen the dollar and pressure equity valuations.
Oil prices remained elevated, adding to concerns about inflation and consumer spending. Gasoline prices averaged $4.34 per gallon, compared with $3.08 a year earlier, according to AAA.
US West Texas Intermediate crude futures rose about 1% to around $95 per barrel on Wednesday. President Donald Trump recently announced a temporary easing of restrictions on Russian diesel fuel exports, but analysts questioned whether the move would significantly reduce fuel costs for truckers and farmers.
Bank of America shares fell 7% after the lender reported its third-quarter results. The decline followed more than $1.2 billion in federal penalties imposed on the bank a day earlier over alleged failures to report more than $5 billion in suspicious transactions.
Morgan Stanley reported quarterly results that exceeded expectations, but its shares were down nearly 2%.
Other major banks also faced pressure despite posting strong quarterly results. Goldman Sachs and Citigroup shares declined Tuesday, suggesting investors were demanding stronger performances from companies during the earnings season.
Technology and semiconductor stocks extended their recent losses. Micron Technology fell 1%, Advanced Micro Devices dropped 3%, and Intel and SanDisk each lost 2%.
Investors are closely watching the technology sector, where semiconductor companies are expected to be a major contributor to year-over-year earnings growth.
Despite JPMorgan Chase reporting third-quarter revenue and earnings per share below expectations, Wells Fargo analyst Mike Mayo said the bank’s outlook more than offset the disappointing results.
JPMorgan reported weaker-than-expected net revenue from its corporate and commercial and investment banking businesses, along with a rare miss on adjusted earnings per share.
However, the bank forecast 10% growth in net interest income in 2027, alongside expense growth of about 4%.
Mayo said the outlook should build confidence that 2027 could be a payoff year following a period of investment. Wells Fargo maintained an overweight rating on JPMorgan shares and a price target of $390.
