US close: Stocks fall as consumer inflation busts through expectations

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Wall Street stocks finished in negative territory on Wednesday, as market participants sifted through consumer inflation numbers that came in hotter than anticipated.

At the close, the Dow Jones Industrial Average was down 0.66% at 36,079.94, as the S&P 500 lost 0.82% to 4,646.71 and the Nasdaq Composite was off 1.66% at 15,622.70.

The Dow lost 240.04 points through the course of Wednesday’s session, extending the points it gave up on Tuesday after October’s producer price index dropped 0.6%.

“Markets don’t like surprises, particularly not when they come in the form of 30-year high inflation numbers,” said AJ Bell financial analyst Danni Hewson.

“Fuel and food were two of the main drivers, which means pretty much every US consumer is feeling the heat.

“There is still a valid argument that these price hikes are transitory and that supply chains just need to work through the kinks, but transitory can feel like a long time especially when there’s no way to know when things will get back on some kind of stable ground.”

Wednesday's primary focus was October's inflation report, which revealed the cost of living in the US rose more quickly than expected in October on the back of further spikes in energy and food prices.

According to the Department of Labor, in seasonally adjusted terms, the headline consumer price index increased at a month-on-month pace of 0.9%, which pushed the year-on-year rate up to 6.2%. Economists had pencilled-in a smaller 0.6% jump to 6.2%.

Energy inflation shot higher by 4.8% versus September, nearly tripling the previous month's advance, while food costs jumped by 0.9%.

Elsewhere on the macro front, the initials jobless claims report from the Labor Department, coming in a day earlier than usual due to tomorrow's Veteran's Day holiday, came in at another fresh Covid-era low of 267,000 in the seven day's ended 5 November, down from the previous week's revised reading of 271,000.

Continuing claims for the week ended 30 October increased slightly to 2.16m from the prior week's revised print of 2.1m.

Still on data, mortgage rates slipped for a second straight week in the seven days ended 5 November, down to 3.16% from 3.24%, helping boost refinance demand across the US.

As a result, total mortgage application volume rose 5.5% week-on-week, according to the Mortgage Bankers Association's seasonally-adjusted index.

Finally, a report from the Census Bureau revealed that wholesale inventories rose 1.4% in September as US businesses prepared for the all-important holiday trading period.

Sales in the month increased 1.1%, while the inventory-to-sales ratio was unchanged at 1.23 months.

On the equity front, Perrigo was down 11.01% after the Ireland-domiciled maker of own-brand painkillers disappointed on earnings and issued a profit warning, while Coinbase Global slid 8.06% after saying it had suffered a slow summer for cryptocurrency trading.

On the upside, food delivery provider DoorDash was 11.58% firmer after it reported record sales, and announced it was acquiring Finnish delivery platform Wolt in an all-shares deal worth over $8bn.

In after-hours trading, dating app developer Bumble was last down 8.9% and media behemoth Walt Disney was 4.44% weaker as both companies released their numbers post-close.

Dow Jones - Risers

Merck & Co. Inc. (MRK) $84.01 1.56%
Johnson & Johnson (JNJ) $164.27 1.08%
Visa Inc. (V) $215.56 1.02%
Procter & Gamble Co. (PG) $146.82 0.98%
American Express Co. (AXP) $181.40 0.85%
Amgen Inc. (AMGN) $213.21 0.71%
Verizon Communications Inc. (VZ) $52.60 0.69%
3M Co. (MMM) $182.42 0.60%
Cisco Systems Inc. (CSCO) $57.77 0.57%
Travelers Company Inc. (TRV) $158.22 0.52%