The S&P 500 fell Wednesday, notching a sixth consecutive daily loss and hitting the lowest close since November 2020 as investors looked ahead to a key consumer report that will inform the pace of the Federal Reserve’s rate hikes going forward.
The Dow Jones Industrial Average shed 28.34 points, or 0.10%, to close at 29,210.85. The S&P 500 lost 0.33%, falling to 3,577.03. The Nasdaq Composite inched down by 0.09% to end at 10,417.10.
Earlier in the day, stocks ticked up and bond yields dropped after minutes from the Federal Reserve’s September meeting were released in the afternoon. The minutes showed that the central bank expects to keep hiking interest rates and keep them high until inflation shows signs of cooling off.
One comment in the meeting minutes led to optimism that the Fed might slow its tightening campaign or even walk it back if there was more financial market turbulence.
“Several participants noted that, particularly in the current highly uncertain global economic and financial environment, it would be important to calibrate the pace of further policy tightening with the aim of mitigating the risk of significant adverse effects on the economic outlook,” the minutes stated.
Stocks whipsawed between gains and losses when the September producer price index, a gauge of final-demand wholesale prices, came in higher than expected. The print was up 0.4% in September, more than the consensus estimate of a 0.2% increase, according to Dow Jones.
The PPI number is one of the inflation gauges investors are watching alongside the Federal Reserve. If inflation stays high, the central bank is more likely to continue its aggressive path of interest rate hikes to bring it back into check. That means rates will continue to rise and may stay high for longer than markets expect, weighing on stocks.
Investors will get even more important inflation data on Thursday. The consumer price index is a measure of price changes in a basket of common consumer goods and services.
“Prices remain elevated so it shouldn’t be a surprise to see producer goods and services rise. Keep in mind the increase is still below what we were seeing consistently month after month earlier this year,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office. “No doubt the Fed still has its work cut out for them, and if tomorrow’s CPI read is hot, don’t be surprised to see some investors come to grips with how long the road to tamer inflation may be.”