Markets End Mostly Higher with Key Data in Focus…..

U.S. equities finished mostly higher in another volatile session, as a busy day unfolded with the unofficial start to Q3 earnings season kicking off and the markets receiving their first look at the September inflation picture. Further contributing to the cautious tone was close attention being paid to this afternoon’s release of the minutes from the Fed’s monetary policy meeting last month that resulted in a signal that the commencement of tapering was in the offing. Financials remained in focus and struggled even after Dow member JPMorgan Chase & Co and BlackRock posted stronger-than-expected earnings results, while Delta Air Lines’ earnings report and guidance were highly scrutinized. Consumer price inflation came in hotter than expected on the headline rate as food, shelter and energy costs remained elevated. Treasuries were mixed with the yield curve flattening noticeably, while the U.S. dollar saw pressure. Crude oil prices were mixed and gold rallied. Europe closed mixed and Asia also diverged.

The Dow Jones Industrial Average declined nearly 1 point to 34,378, while the S&P 500 Index increased 13 points (0.3%) to 4,364, and the Nasdaq Composite rose 106 points (0.7%) to 14,572. In moderate volume, 795 million shares were traded on the NYSE and 4.0 billion shares changed hands on the Nasdaq. WTI crude oil dipped $0.20 to $80.44 per barrel. Elsewhere, the gold spot price jumped $33.80 to $1,793.10 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—fell 0.5% to 94.02.

Consumer price inflation continues to climb, look at Fed meeting due out in afternoon…..

The Consumer Price Index (CPI) rose 0.4% month-over-month (m/m) in September, above the Bloomberg consensus estimate calling for it to match August’s unrevised 0.3% increase. The core rate, which strips out food and energy, increased 0.2% m/m, in line with expectations, and following August’s unadjusted 0.1% rise. Y/Y, prices were 5.4% higher for the headline rate, north of forecasts calling for it to remain at August’s unrevised 5.3% rise. The core rate was up 4.0% y/y, matching projections and August’s unrevised increase.

The Bureau of Labor Statistics (BLS) said prices for food and shelter rose in September and together contributed more than half to the headline figure, while energy prices were also higher. For the core rate, the BLS said along with shelter costs, prices for new vehicles, household furnishings, and motor vehicle insurance also rose. However, prices for airline fares, apparel, and used cars and trucks all declined over the month.

The MBA Mortgage Application Index ticked 0.2% higher last week, following the prior week’s drop of 6.9%. The modest increase came as a 0.5% dip for the Refinance Index was more than offset by a 1.5% gain for the Purchase Index. The average 30-year mortgage rate rose 4 basis points (bps) to 3.18%.

In afternoon action, the Fed released the minutes from its September monetary policy meeting, noting that the Federal Open Market Committee (FOMC) felt it has come close to reaching its goals and that it could begin pulling back its stimulus measures put in place to combat the pandemic’s effect on the economy. The report showed that officials could begin by cutting $10 billion a month in Treasuries and $5 billion monthly in mortgage-backed securities, with a target date to end purchases by mid-2022. “Participants noted that if a decision to begin tapering purchases occurred at the next meeting, the process of tapering could commence with the monthly purchase calendars beginning in either mid-November or mid-December,” the summary added. The FOMC’s next two-day monetary policy meeting is slated for November 2-3.

©2021 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.

Schwab Center for Financial Research (“SCFR”) is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.