U.S. stocks ended Wednesday’s session slightly lower, as producer price data showed inflation inched up last month and a readout of Federal Reserve meeting minutes affirmed officials were likely to proceed with their rate-hiking plans.
The S&P 500 (^GSPC) closed down about 0.3%, while the Dow Jones Industrial Average (^DJI) dropped 0.1%. The technology-heavy Nasdaq Composite (^IXIC) also shed about 0.1%. All three gave up previous gains throughout the day.
The September producer price index (PPI), a measure of prices at the wholesale level, rose 0.4% in September after falling 0.2% during the prior month as inflation persisted. Economists expected the headline figure to rise 0.2%. The PPI release comes before Thursday’s highly anticipated release of the government’s consumer price index (CPI) report.
“Prices remain elevated so it shouldn’t be a surprise to see producer goods and services rise. Keep in mind the increase is still below what we were seeing consistently month after month earlier this year,” wrote Mike Loewengart, Head of Model Portfolio Construction at Morgan Stanley Global Investment Office.
“No doubt the Fed still has its work cut out for them, and if tomorrow’s CPI read is hot, don’t be surprised to see some investors come to grips with how long the road to tamer inflation may be,” Loewengart added.
Investors also mulled minutes from the Federal Reserve’s latest monetary-policy meeting, which indicated restrictive monetary policy would stay in place until inflation meaningfully comes down.
“Any hope of a helping hand from the Fed minutes may not be forthcoming, with the commentary to an extent outdated at this point and policymakers seemingly unified in their goal of defeating inflation. Even a good CPI number tomorrow may do little to change that in the near-term,” wrote Craig Erlam, Senior Market Analyst at Oanda.
Wall Street has also been keeping a close eye on monetary action overseas, as Bank of England Governor Andrew Bailey announced the bank would end its emergency bond-buying program Friday.
“Bailey’s comments do not inspire great confidence in sterling assets. Multiple comments — including the indicative message to funds that ‘you’ve got three days left’ makes it clear that the BoE does not intend to roll forward its temporary asset purchases,” Patrick Locke, a G10 FX Strategist at JPMorgan Chase, wrote in a note to clients.
The move could prompt further asset selloffs from U.K. pension funds amid interest-rate hikes. The impact hit yield on 30-year gilts, but U.S. Treasuries were unchanged. Treasury yields remained lower across the curve as crude oil stayed flat.
Analysts are also bracing for the first wave of major corporate earnings reports out this week, which could further show weakness as persistent inflation, higher interest rates, and a stronger dollar weigh on companies’ bottom lines. PepsiCo (PEP) posted better-than-expected results as the company lifted its annual forecasts for revenue and profits. The stock closed up more than 4%.
On Wednesday, the Food and Drug Administration authorized an updated Covid-19 booster shots for children as young as 5 years old. Shares of Moderna (MRNA) were up 8.3%, and Pfizer (PFE) ticked up 0.3% following the emergency authorization.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv