Key facts
- US stocks are set for a lower open following a hotter-than-expected inflation report.
- September consumer prices rose 3.7% year-on-year, above the 3.6% forecast.
- The inflation data has increased bets on a Federal Reserve interest rate hike this month.
- Treasury yields climbed, with the 10-year yield rising after the report.
- Bank of America shares declined premarket after its profit disappointed.
Wall Street's main indexes were poised for a lower open on Wednesday as a surprise jump in consumer prices for September boosted expectations for another Federal Reserve interest rate hike this month. The S&P 500 proxy was down 0.3% in premarket trading.
The consumer price index rose 3.7% from a year earlier, exceeding the 3.6% forecast and up from 3.4% in August. Core inflation also came in above expectations. This data pushed Treasury yields higher, with the 10-year yield climbing after closing Tuesday at 5.2%. Traders have raised the odds of a Fed move this month, which had previously been expected to be delayed until December.
In corporate news, Bank of America shares fell 7.3% in premarket trading after its profit disappointed, even after excluding a $1.2 billion fine. Chipmakers also continued to weigh on the tech sector, with memory stocks extending declines. The PHLX chip index has fallen more than 8% in the past five sessions.
Analysts anticipate S&P 500 third-quarter earnings to rise over 30%, with the index's forward valuation below 19 times expected earnings, the lowest since 2023. However, today's CPI report tests whether this earnings growth can sustain amid rising rates. The rally has been narrow, with the median S&P 500 stock up less than 5% this year.