Stocks Retreat on Sticky US Price Pressures
The S&P 500 Index ($SPX) (SPY) is down by -0.42% today, the Dow Jones Industrial Average ($DOWI) (DIA) is down by -0.07%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.70%. December E-mini S&P futures (ESZ26) are down -0.61%, and December E-mini Nasdaq futures (NQZ26) are down -0.81%.
Stock indexes are falling today, with the Nasdaq 100 sliding to a 2-week low, as bond yields rise after US September consumer prices rose more than expected, reinforcing speculation that the Fed will keep interest rates higher for longer amid sticky price pressures. The 10-year T-note yield is up +9 bp to 5.30%, and the chance for a 25 bp rate hike by the Fed at this month’s FOMC meeting rose to 54% from 22% before the CPI report.
US Sep CPI rose +3.7% y/y, stronger than expectations of +3.6% y/y. Sep core CPI rose +2.6% y/y, stronger than expectations of 2.5% y/y.
Stocks and bonds garnered some support today on comments from Fed Vice Chair Michelle Bowman, who signaled she favors keeping Fed policy steady at this month's FOMC meeting when she said, "We have some time to wait and see how financial conditions and the economy evolve before we decide that we need to take any more action" on interest rates.
US MBA mortgage applications fell -2.7% in the week ended October 9, with the purchase mortgage sub-index down -4.0% and the refinancing mortgage sub-index down -0.4%. The average 30-year fixed-rate mortgage rose +1 bp to a 2.75-year high of 7.50% from 7.49% the prior week.
China's trade news was better than expected, supporting global growth prospects. China Sep exports rose +36.3% y/y, stronger than expectations of +25.7% y/y and the most in 7 months. Sep imports rose +31.0% y/y, stronger than expectations of +25.0% y/y.
Stocks have support from the prospect of solid quarterly earnings results starting this week. Goldman Sachs on Monday raised its three-month view on global equity markets to overweight from neutral, saying. “Earnings growth remains supportive for equities and the recent valuation de-rating has improved asymmetry into the third-quarter earnings season.” According to data compiled by Bloomberg Intelligence, Q3 S&P 500 earnings are expected to climb by +25% from a year earlier, up from a July estimate of 22%.
Nov WTI crude oil prices (CLX26) are up more than +1% today as Yemen's Houthi rebels launched multiple drone and missile attacks across Saudi Arabia, including energy infrastructure. Iran has also increased attacks on shipping attempting to transit the Strait of Hormuz, threatening the recent recovery in Middle Eastern energy supplies.
Markets are discounting a 54% chance of a +25 bp Fed rate hike at the next FOMC meeting on October 27-28.
Overseas stock markets are mixed today. The Euro Stoxx 50 is up +0.32%. China's Shanghai Composite closed down -0.89%. Japan's Nikkei-225 Stock Average closed down -0.05%.
Interest Rates
December 10-year T-notes (ZNZ6) are down by -22 ticks today. The 10-year T-note yield is up +9.3 bp to 5.302%. T-note prices retreated today, and yields rose on the stronger-than-expected US Sep CPI report, which boosted the chance of a Fed rate hike later this month to 53% from 22% before the report. Also, today’s +1% increase in WTI crude oil has raised inflation expectations and is bearish for T-notes. On the positive side for T-notes today, Fed Vice Chair Bowman said she sees no urgent need for the Fed to raise interest rates.
European government bond yields are moving higher today. The 10-year German bund yield is up +2.0 bp to 3.489%. The 10-year UK gilt yield is up +0.2 bp to 5.449%.
The German Sep wholesale price index rose +8.7% y/y from +6.8% y/y in Aug, the strongest pace of increase in nearly 3.5 years.
Markets are discounting a 13% chance of a +25 bp ECB rate hike at the ECB’s next meeting on October 29.
US Stock Movers
Chipmakers and AI-infrastructure stocks are retreating today, weighing on the overall market. CoreWeave is down more than -12% to lead losers in the Nasdaq 100. Also, Lumentum Holdings (LITE) is down more than -4%, and Advanced Micro Devices (AMD), ARM Holdings Plc (ARM), and Marvell Technology (MRVL) are down more than -3%. In addition, Lam Research (LRCX), Applied Materials (AMAT), SanDisk (SNDK), NXP Semiconductors NV (NXPI), and Texas Instruments (TXN) are down more than -2%.
Homebuilders and building suppliers are falling today with the jump in the 10-year T-note yield, which raises mortgage rates and undercuts housing demand. DR Horton (DHI), Lennar (LEN), and Pulte Group (PHM) are down more than -3%, and KB Home (KBH), Toll Brothers (TOL), and Builders Firstsource (BLDR) are down more than -2%.
Progressive (PGR) is down more than -9% to lead losers in the S&P 500 after reporting Q3 net premiums written of $22.30 billion, below the consensus of $22.50 billion.
Bank of America (BAC) is down more than -7% after reporting Q3 equities trading revenue ex-DVA of $2.51 billion, weaker than the consensus of $2.63 billion.
Dell Technologies (DELL) is down more than -6%, Hewlett Packard Enterprise (HPE) is down more than -4%, and NetApp (NTAP) is down more than -2% after Barclays downgraded the stocks to equal weight from overweight.
Sotera Health (SHC) is down more than -2% after JPMorgan Chase downgraded the stock to underweight from neutral with a price target of $17.
Liquidia (LQDA) is up more than +30% after reaching a global settlement resolving all pending litigation with United Therapeutics.
BlackRock (BLK) is up more than +2% after reporting Q3 revenue of $7.75 billion, better than the consensus of $7.40 billion.
Albemarle (ALB) is up more than +2% after Mizuho Securities upgraded the stock to buy from neutral with a price target of $130.
Accenture Plc (ACN) is up more than +2% after forecasting mid-single digit revenue growth for fiscal 2027 and 2028.
Earnings Reports (10/14/2026)
Bank of America Corp (BAC), Blackrock Inc (BLK), Fastenal Co (FAST), Morgan Stanley (MS), Progressive Corp/The (PGR), State Street Corp (STT).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.