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The S&P 500 fell after US inflation data, ending a weak third quarter

The S&P 500 fell after US inflation data, ending a weak third quarter

File photo: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, September 28, 2023. REUTERS/Brendan McDiarmid/File Photo Obtaining licensing rights

  • All three indices record quarterly declines
  • Personal consumption expenditures data show that underlying price pressures are easing
  • Republicans reject the funding bill, and a government shutdown is imminent
  • Nike shares jump with first-quarter earnings beat
  • Indices: The Dow Jones fell by 0.47%, the S&P fell by 0.27%, and the Nasdaq rose by 0.14%.

September 29 (Reuters) – The S&P 500 index closed lower on Friday as investors digested the implications of the U.S. inflation report on the Federal Reserve’s interest rate policy and adjusted their portfolios on the final day of a weak third quarter for stocks.

The S&P 500 and Nasdaq recorded their largest monthly percentage declines this year, while all three major indexes saw their first quarterly declines in 2023.

The personal consumption expenditures price index, excluding volatile food and energy components, rose 3.9% year-on-year in August, the first time in more than two years that it fell below 4%, the data showed. The Fed tracks PCE price indexes for its 2% inflation target.

Stocks initially rose after the PCE report but then faded.

Eric Friedman, chief investment officer at U.S. Bank Asset Management, said the data revealed “a better-than-expected but still elevated inflation picture.”

Meanwhile, Friedman said, “We are at the end of the quarter, and with the end of the quarter comes all kinds of activity in the stock and bond markets.”

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The Dow Jones Industrial Average fell 158.84 points, or 0.47%, to 33,507.5 points, the Standard & Poor’s 500 Index lost 11.65 points, or 0.27%, to 4,288.05 points, and the Nasdaq Composite Index gained 18.05 points, or 0.27%. 0.14% to 13219.32.

Among the S&P 500 sectors, energy stocks (.SPNY) fell by about 2% and financial stocks (.SPSY) fell by 0.9%. Energy remained by far the largest profitable sector in the third quarter.

“Energy and financial prices have risen on a relative basis, and they are feeling some rebalancing effect today,” Friedman said.

During the quarter, the S&P 500 fell about 3.6%, the Dow lost 2.6%, and the Nasdaq lost 4.1%. In September, the S&P 500 fell 4.9%, the Dow Jones fell 3.5%, and the Nasdaq fell 5.8%.

The anticipated personal consumption expenditures data came on the heels of last week’s tighter long-term outlook for interest rates from the Federal Reserve, which rattled stocks as benchmark Treasury yields rose to their highest levels in 16 years.

“Equity investors are finally waking up to the Fed and the Fed’s comments that interest rates will be higher for longer, and that there is an alternative to stocks,” said Paul Nolte, senior wealth advisor and market strategist at Murphy & Sylvest Wealth Management.

Investors were also watching Washington. Hard-line Republicans in the US House of Representatives rejected a bill proposed by their leader to temporarily fund the government, making it certain that federal agencies will partially close their doors starting Sunday.

Traders are also concerned that JPMorgan’s $16 billion fund, which is expected to reset its options positions on Friday, will be another source of market volatility.

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In company news, shares of Nike (NKE.N) jumped 6.7% after the world’s largest sportswear maker beat Wall Street estimates for first-quarter earnings.

Declining issues outnumbered advancing stocks by a ratio of 1.2 to 1 on the New York Stock Exchange. There were 54 new highs and 142 new lows on the NYSE.

On the Nasdaq, advancing issues outnumbered declining stocks by a ratio of 1.1 to 1. The Nasdaq recorded 46 new highs and 168 new lows.

About 11.3 billion shares were traded on US stock exchanges, compared to a daily average of 10.4 billion during the past twenty sessions.

(Reporting by Louis Krauskopf in New York and Shiswat Chauhan and Shristi Achar A in Bengaluru – Preparing by Muhammad for the Arabic Bulletin – Preparing by Muhammad Jibril for the Arabic Bulletin) Editing by Arun Kuyur, Majo Samuel and David Gregorio

Our standards: Thomson Reuters Trust Principles.

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Shristi is a reporter, part of the markets team reporting on equity markets across the US, UK, Canada, Europe and emerging markets.