Wall Street Churns After Inflation Data Arrives

Rate was only slightly higher than expected
By Newser Editors and Wire Services
Posted Sep 13, 2023 3:50 PM CDT
Wall Street Churns After Inflation Data Arrives
Trader David O'Day, left, and specialist John Parisi work on the floor of the New York Stock Exchange, Wednesday, Sept. 13, 2023.   (AP Photo/Richard Drew)

Stocks churned to a mixed close on Wall Street after a highly anticipated report showed inflation accelerated across the country last month, but not by much more than expected. The S&P 500 rose 5.54 points, or 0.1%, to 4,467.44. The Dow Jones Industrial Average fell 70.46 points, or 0.2%, to 34,575.53. The Nasdaq composite rose 39.97 points, or 0.3%, to 13,813.59. The report said US. consumers paid prices last month that were 3.7% higher than a year earlier, up from July's inflation rate of 3.2%.

That's discouraging for shoppers paying higher prices, but much of the acceleration was because of higher fuel costs, which can swing very sharply and quickly. Ignoring those, underlying inflation trends still look to be pointing toward continued moderation, economists said. Inflation peaked last year above 9%. While the inflation data was a touch hotter than estimated, economists and investors don't expect it to change the Federal Reserve's anticipated track much, the AP reports. The forecast is still for the Fed to keep interest rates steady at its meeting next week.

Stocks of airlines struggled after a couple warned of the hit to profits they're taking because of higher costs. American Airlines cut its forecast for profits during the summer because fuel costs are running higher than it expected. It also had to pay about $230 million in retroactive pay to pilots after they ratified a new labor contract. Its stock fell 5.7%. Spirit Airlines said it's also paying higher fuel costs this summer than expected, roughly $3.06 per gallon instead of the $2.80 it had earlier forecast. It's also been seeing steep discounting to fares during the last few weeks. That pushed it to cut its forecast for revenue during the third quarter, and its stock fell 6.3%.

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Other airlines also sank, including declines of 3.8% for United Airlines, 2.8% for Delta Air Lines, and 1.7% for Southwest Airlines.On the winning end of Wall Street were high-growth stocks that could be big beneficiaries if the Fed is indeed done hiking interest rates. High rates hurt all kinds of investments, but they often most hurt technology companies and others promising big growth far out in the future. Amazon climbed 2.6% and was one of the strongest forces pushing upward on the S&P 500. Microsoft gained 1.3%, and Tesla climbed 1.4%. Moderna jumped 3.2% after it reported encouraging results from a trial of a flu vaccine.

(More stock market stories.)

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