U.S. equity markets are sinking after the country’s September inflation reading came in hotter than expected. The Consumer Price Index (CPI), a leading measure of the costs of goods and services, rose 0.2% month-over-month in September and was up 2.4% from a year earlier. Both readings were 0.1 percentage points above the consensus expectations of economists.
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Inflation rising more than expected in September has traders and analysts rethinking the future path of interest rate cuts. Currently, futures markets are pricing in a 25-basis point interest rate reduction from the U.S. Federal Reserve at its next policy meeting on Nov. 7. That assumption might now be in doubt if inflation proves to be stickier than estimated.
However, despite exceeding economists’ expectations, September’s annual inflation rate of 2.4% was the lowest it has been in the U.S. since February 2021. Excluding volatile food and energy prices, so called core inflation gained 0.3% month-over-month in September, and was up 3.3% on a year-over-year basis. Both core readings were also 0.1 percentage points higher than consensus forecasts.
U.S. Jobless Claims Rise
Also weighing on U.S. markets today (October 10) are jobless claims, which have unexpectedly risen due to impacts from Hurricane Helene and its aftermath. The U.S. Labor Department reported that filings for unemployment benefits totaled 258,000 for the week ended Oct. 5. That was the highest total in more than a year and well ahead of forecasts that called for 230,000 jobless claims.
Continuing or ongoing claims for unemployment benefits in America rose to 1.861 million in the week ended Oct. 5, an increase of 42,000. While the Labor Department blamed the sharp rise in jobless claims on Hurricane Helene, which struck Sept. 26 in Florida and North Carolina, it has nevertheless renewed concerns that the U.S. economy is slowing down, which is pressuring stock prices.
Is the SPDR S&P 500 ETF Trust a Buy?
The SPDR S&P 500 ETF Trust (SPY), which tracks the benchmark S&P 500 index, has a consensus Moderate Buy rating among 504 Wall Street analysts. That rating is based on 403 Buy, 93 Hold and eight Sell recommendations issued in the last three months. The average SPY price target of $625.36 implies 8.92% upside from current levels.
