Key Takeaways

  • Stocks take a tumble in the wake of four consecutive winning sessions
  • Thursday’s CPI report showed that inflation hasn’t cooled down just yet

Stocks vs Bonds

Stocks hit the brakes on a four-day winning streak on Thursday, with the Nasdaq being the worst performer, diving 0.63%. The S&P 500 slid 0.62% on the day. The Dow Jones Industrial Average followed closely behind with a decline of 0.51%. While stocks face some setbacks, treasury bonds shine. The 10-year Treasury yield rose as high as 4.71% on Thursday, which was mostly expected, as typically bond and stock prices move inversely to each other. The yield hit a 16-year high at the beginning of the month, crossing the 4.8% mark, before retreating to its current level of 4.65%.

CPI Shakes the Market

The broad-based stock selloff came as Wall Street mulled over the CPI results released Thursday by the US Bureau of Labor Statistics. The September consumer-price print showed that inflation is sticky with core CPI rising 0.3% for the month. Headline CPI was boosted by 0.4%, with the addition of food and energy to the equation. The annual CPI inflation held at 3.7%, while core inflation decreased from 4.3% in August to 4.1%.  In essence, the results don’t offer much information regarding the Federal Reserve’s next move on interest rates. According to the CME FedWatch tool, only a meager 9% of polled participants believe that the Fed will go on to hike the benchmark rate at their Oct. 31 – Nov. 1 meeting. The last time the Fed raised its interest rate was in July, to its current level of 5.25%-5.50%, or the highest they’ve been since January 2001.  Nonetheless, interesting times are in front as we watch the Fed navigate the results while they take aim at a 2% inflation goal. Traders should stay ahead of market-moving events and keep a watchful eye on the economic calendar. Strategize, maintain discipline and complete your due diligence with technical analysis. Getting to know your assets will help you decipher their next move like a pro.