US stocks opened lower on Wednesday as September inflation data came in slightly hotter than expected, pushing Treasury yields higher and adding pressure to equity valuations.
Investors also assessed quarterly results from major banks and continued declines in semiconductor stocks.
The Nasdaq Composite dropped 0.7%. The Dow Jones Industrial Average gained 65 points while the S&P 500 was down 0.42%.
September CPI rises 3.7% as energy prices surge
The US consumer price index (CPI) increased 0.6% month over month in September, matching economists’ expectations.
However, annual inflation accelerated to 3.7%, exceeding the 3.6% forecast from economists surveyed by Dow Jones.
Core CPI, which excludes food and energy, rose 0.3% from August and 2.6% from a year earlier.
Both readings were slightly above expectations of 0.2% and 2.5%, respectively.
Energy costs remained a significant contributor to inflation.
Gasoline prices rose 9.1% month over month, accounting for more than half of the increase in headline CPI. The energy price index climbed 20.4% year over year.
The inflation report arrived as oil prices remained elevated, adding to concerns about pressure on household budgets and the outlook for monetary policy.
US West Texas Intermediate crude futures rose 1.3% to around $95.43 per barrel on Wednesday.
Average gasoline prices stood at $4.34 per gallon, compared with $3.08 a year earlier, according to AAA.
President Donald Trump recently announced plans to temporarily ease restrictions on Russian diesel exports, although analysts have questioned whether the move would significantly reduce fuel costs.
Treasury yields climbed following the inflation release.
The 10-year Treasury yield rose more than six basis points to 5.278%, while the 30-year yield increased more than two basis points to 5.59%.
Higher yields can weigh on equity valuations by increasing borrowing costs and making bonds more competitive with stocks.
Bank earnings keep investors on alert
Investors also assessed another round of quarterly bank earnings, with mixed results failing to support financial stocks.
Bank of America shares fell 7% in trading after the lender reported lower third-quarter profit. The bank set aside $1.2 billion in provisions following federal penalties related to failures to detect potentially illicit activity.
The development came a day after regulators imposed more than $1.2 billion in penalties over the bank’s handling of suspicious transactions.
Morgan Stanley reported higher quarterly income, supported by strong equity trading revenue, but its shares also moved lower.
The results followed a mixed session for major banks on Tuesday.
JPMorgan Chase shares declined after fixed-income trading revenue fell unexpectedly, while Goldman Sachs also came under pressure after its fixed-income revenue missed estimates.
Citigroup was among the weakest performers in the banking sector.
BlackRock, meanwhile, reported higher third-quarter profit as fees from managing client assets increased, with its shares rising at market open.
Semiconductor stocks extend recent losses
Technology shares remained another source of pressure as semiconductor stocks continued their recent declines.
Micron Technology fell 1.4% in trading after losing more than 3% in the previous session.
Advanced Micro Devices and Intel dropped more than 2.4%, while SanDisk declined 2%.
The weakness comes as investors reassess technology valuations and the financing requirements of artificial intelligence companies.
Questions surrounding the financial positions and expected public listings of OpenAI and Anthropic have added to concerns about debt-funded investment across the AI industry.
Despite the pressure, earnings expectations remain strong.
FactSet data indicate that S&P 500 companies are expected to report blended earnings growth of around 30% in the third quarter.
Semiconductor and semiconductor equipment companies are projected to deliver growth of approximately 130%, making the sector a major contributor to the earnings outlook.
The post Nasdaq drops as hotter CPI, bank earnings and chip losses weigh on markets appeared first on Invezz