Wall St falls as consumer data raises inflation concerns

  • JPM reports higher-than-expected results for the third quarter
  • S&P 500, Nasdaq post weekly declines
  • US consumer sentiment rises in October; inflation forecast. aggravate
  • Dow down 1.34%, S&P 500 down 2.37%, Nasdaq down 3.08%

NEW YORK, Oct 14 (Reuters) – U.S. stocks fell on Friday as worsening inflation expectations kept intact concerns that the Federal Reserve’s aggressive rate hike path could trigger a recession, while investors digested the early stages of the earnings season.

In the latest session of a volatile week, stocks opened higher, reversing course after data from the University of Michigan showed consumer sentiment improved in October but inflation expectations worsened as gasoline prices rose. Retail sales data also indicated resilience among consumers.

“The main driver for the market right now is higher interest rates, higher inflation, and the Fed is going to continue to move its fed funds targets higher,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan.

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“The narrative that we’ve seen peak inflation isn’t clear yet, and that’s depressing the market.”

On Thursday, a reading on consumer prices (CPI) showed that inflation remained stubbornly high.

Fed officials have been largely in sync when commenting on the need to raise interest rates, and St. Louis Fed President James Bullard said in a Reuters interview that the recent CPI data warrants continued “frontloading” through larger steps in three quarters percentage points, although this does not necessarily mean that interest rates must be raised above the central bank’s latest estimate.

The Dow Jones Industrial Average (.DJI) fell 403.89 points, or 1.34%, to 29,634.83, the S&P 500 (.SPX) lost 86.84 points, or 2.37%, to 3,583.07 and The Nasdaq Composite fell (.3.2IX or 7.7 points). 3.08% to 10,321.39.

Friday’s decline marked the 37th time the S&P 500 posted a gain or loss of at least 2%, compared to just seven such sessions in all of 2021. For the week, the Dow rose 1.15%, the S&P 500 lost 1.56% and the Nasdaq fell 3.11 %.

The corporate earnings season started to pick up, helping the banking index (.SPXBK), which edged up 0.03% after quarterly results from JPMorgan Chase & Co (JPM.N), up 1.66%, Citigroup Inc (CN) , up 0.65%, and Wells Fargo & Co ( WFC.N ), up 1.86%, each added shares.

“The message I got from them is that things are looking pretty good from an economic perspective despite the challenges, but they increased the loan loss reserves just in anticipation that you’re going to see some more decline,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments in Menomonee Falls, Wisconsin.

UnitedHealth rose 0.63% as one of only three Dow components to rise on the day after the health insurer posted better-than-expected quarterly results while raising its annual forecast.

Analysts now expect third-quarter profits for S&P 500 companies to have risen just 3.6% from a year ago, much lower than an 11.1% increase expected in early July, according to Refinitiv data.

Kroger Co ( KR.N ) shares fell 7.32% after the supermarket chain said it would buy smaller rival Albertsons Companies Inc ( ACI.N ) in a $24.6 billion deal.

Tesla Inc ( TSLA.O ) fell 7.55% after media reports that the electric car maker has put plans to start battery cell production at its factory outside Berlin on hold due to technical problems.

Volume on US exchanges was 10.88 billion shares, compared to the 11.48 billion average for the full session over the past 20 trading days.

Falling issues outnumbered advancing ones on the NYSE by a ratio of 4.20 to 1; on the Nasdaq a 2.87 to 1 ratio favored decliners.

S&P 500 posted 5 new 52-week highs and 7 new lows; The Nasdaq Composite registered 71 new highs and 235 new lows.

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Additional reporting by Herbert Lash and Noel Randewich; Editing by Chizu Nomiyama and David Gregorio

Our standards: Thomson Reuters Trust Principles.

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