Markets slide after report showing sticky inflation and labor market data

Dow was off 84, decliners over advancers better than 3-2 & NAZ lost 19.  The MLP index crawled higher in the 288s & the REIT index fell 2+ to the 422s.  Junk bond funds edged higher & Treasuries saw a little more selling which.lifted yields (more below).  Oil added 1+ to about 75 & gold gained 15 to 2241.

Dow Jones Industrials

Inflation continued to cool in Sep to the lowest level in 3 years, though the report came in slightly hotter than expected.  The Labor Dept said the consumer price index (CPI) – a broad measure of how much everyday goods like gasoline, groceries & rent cost – rose 0.2% in Sep from the prior month & was up 2.4% from a year ago.  The inflation would slow to 2.3% on an annual basis with it rising 0.1% from last month, according to estimates.  Core prices, which exclude more volatile measurements of gasoline & food to better assess price growth trends, were up 0.3% on a monthly basis & 3.3% compared to a year ago – slightly higher than expectations of 0.2% & 3.2%, respectively.  Overall, the report showed signs that inflationary pressures in the US economy are continuing to ease, though prices remain above the Federal Reserve's 2% target.  High inflation has created severe financial pressures for most US households , which are forced to pay more for everyday necessities like food & rent.  Price hikes are particularly devastating for lower-income Americans, because they tend to spend more of their already-stretched paycheck on necessities & therefore have less flexibility to save money.  Much of the increase in core inflation came from shelter prices rising 0.2% compared with Aug.  Shelter prices are up 4.9% over the last year & accounted for over 65% of the total 12-month increase in the core inflation index that excludes food & energy.  Other areas with notable price increases from a year ago include motor vehicle insurance (+16.3%), medical care (+3.3%), personal care (+2.5%) & apparel (+1.8%).  Prices for airline fares rose 3.2% in Sep compared with Aug.  That was slightly slower than the 3.9% increase a month ago & leaves the year-over-year rise at 1.6%.  Consumers also experienced an increase in food prices, which increased 0.4% on a monthly basis & were up 2.3% from a year ago.  The food at home index also rose 0.4% compared with a month ago, though its annual increase was notably smaller at 1.3%.  Prices for food away from home were up 0.3% on a monthly basis & 3.9% from a year ago.  Energy prices declined 1.9% in Sep compared with Aug & are down 6.8% compared with a year ago.

Inflation report just released — prices rose faster than economists even predicted

Treasury yields were steady as investors studied fresh inflation & jobless claims data, showing inflation rising more than expected in Sep while weekly claims for unemployment benefits revealed a cooler labor market.  The 10-year Treasury yield was less than 1 basis point higher at 4.073%, while the 2-year Treasury  was less than 1 basis point lower at 4.012%.  Yields move inversely to prices & 1 basis point equals 0.01%.  Treasuries were moving as investors assessed a series of economic data.  The consumer price index increased 0.2% in Sep (see above).  Jobless claims also made an unexpected advance.  Initial filings for unemployment benefits rose to 258K for last week, the highest since Aug 2023.  Yields had risen yesterday as minutes from the Federal Reserve's policy meeting in Sep, when the central bank lowered benchmark borrowing costs to 4.75% - 5.00%, pointed to some division over the size of the rate cut.

Treasury yields are steady as traders weigh CPI, jobless claims reports

Universal Insurance (UVE) surged more while power generator maker Generac Generac (GNRC) tumbled as Florida assessed the damage from Hurricane Milton.  Insurance stocks were broadly positiv.  The insurers were likely rising in relief that Milton was not as severe as originally anticipated, though damage assessments are just beginning.  Florida Gov Ron DeSantis said that Florida had avoided the worst-case scenario, a major hurricane hitting the densely populated Tampa Bay area.  Earlier in the week, Milton was a Category 5 hurricane that appeared on track to hit Tampa Bay, but the storm weakened into Category 3 before making landfall near Siesta Key.  UVE stock was up 1.73 (10%) & GNRC stock dropped 5.28 (3%). 

Universal Insurance surges, Generac tumbles as Florida assesses Milton damage

The stock market drifted lower after the latest consumer inflation print came in hotter than predicted, setting up expectations for the path of interest rates.  The data was of greater interest than usual as investors puzzle over the chances of a "no landing" for the economy after last week's jobs report revived worries about inflation flaring up again.  But the jobs market provided a surprise as initial unemployment claims rose.