Stock Market Today: Dow ends slightly lower, stocks eases back from record highs ahead of bank earnings
Here’s what to read on Thursday:
Latest Updates
U.S. stocks logged a modest pullback Thursday, taking a breather from a rally that saw the Dow and S&P 500 ring up another round of record closes a day before.
The retreat for equities came in the wake of slightly stickier inflation data for September and as investors gauged what sway that may have over the Federal Reserve’s next interest-rate decision in November.
The Dow Jones Industrial Average fell 57.88 points, or 0.1%, ending at 42,454.12.
The S&P 500 shed 12 points, or 0.2%, closing at 5,780.05.
The Nasdaq Composite dropped 9.57 points, or nearly 0.1%, finishing at 18,282.05.
Oil futures climbed by nearly 4% on Thursday, prompting prices to turn higher for the week, supported by continued worries over the potential for a more direct confrontation between Israel and Iran that could threaten Middle East crude flows.
“The conflict in the Middle East remains a concern, particularly if any military action impacts production or transport of crude,” Colin Cieszynski, portfolio manager and chief market strategist at SIA Wealth Management, told MarketWatch. “Worries have cooled a bit since nothing major happened on Monday, but that could change at any time without warning.”
West Texas Intermediate crude for November delivery rose $2.61, or 3.6%, to $75.85 a barrel on the New York Mercantile Exchange, with front-month prices up around 2% for the week.
December Brent crude, the global benchmark, climbed by $2.82, or 3.7%, to $79.40 a barrel on ICE Futures Europe after posting a two-session loss of 5.4%.
U.S. stocks were pulling back from record territory in the final hour of trade Thursday as investors looked forward to big banks kicking off earnings season in earnest.
“Inflation is ebbing lower, but it’s going to take some time,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial, in a phone interview.
It also doesn’t help that an early raft of third-quarter earnings results and forward guidance from PepsiCo Inc. and Delta Air Lines Inc. were not bad, but also not very encouraging. “That’s not setting a positive tone for markets,” Saglimbene said.
Big banks reporting on Friday aren’t likely to offer a lot of surprises, he added, but there still was “a little bit of trepidation about what they might look like.”
Traders who priced in a hard landing for the economy via sharply lower short-term interest rates were “clearly misguided,” according to Rick Rieder, BlackRock’s chief investment officer of global fixed income.
Aggressive pricing in short-end interest rates, which went as low as 2.70% for the December 2025 funds rate, has since backed up to 3.38%, Rieder said in emailed comments Thursday.
“It suggests some value has been created in front-end interest rates versus being overvalued against cash interest rates,” he said. “Overall, we think more balance has been created.”
While progress on inflation has stalled slightly, Rieder said one could say the Fed’s “work is done” because “inflation is close enough to target that they can continue normalizing interest rates amid balanced objectives.”
Expect major U.S. banks, including JPMorgan Chase & Co., to report strong results for the third quarter, and also provide strong guidance.
That’s according to Louis Navellier, chairman and founder of Navellier & Associates, in a client note Thursday, a day before a wave of big banks are due to kick off the earnings season in earnest on Friday.
“The Treasury yield curve is now very favorable to banks, so I am expecting upbeat guidance from Jamie Dimon and other banking leaders,” Navellier wrote.
“I suspect that loan-loss reserves may be boosted since the Philadelphia Fed has been reporting that 30-, 60- and 90-day loan delinquencies have been increasing in recent months.”
The benchmark 10-year Treasury yield was at 4.09% on Thursday, above its 2-year counterpart at 3.99%, after the two plots were “inverted” for a record stretch.
A new $22 billion auction of 30-year Treasury bonds on Thursday was met with solid demand, as traders snapped up some of the highest yields available in the sector in months.
While there was some preauction positioning that moved yields up right before, the auction still saw “decent demand that reinforced the bearish bond pricing of post-CPI trading,” said Will Compernolle, macro strategist at FHN Financial.
The 30-year Treasury yield climbed about 5 basis points on Thursday to 4.39%, according to FactSet.
That’s about 45 basis points above its one-year low of around 3.94% set on Sept. 16, according to Dow Jones Market data.
The 10-year Treasury yield was up 3 basis points to 4.1% as traders weighed the odds of the Federal Reserve cutting interest rates by 25 basis points in November, or not at all.
The Federal Reserve could stand pat at an upcoming policy meeting if the data warrant, Atlanta Fed President Raphael Bostic said Thursday.
“I am totally comfortable with skipping a meeting if the data suggests that’s appropriate,” Bostic said, in an interview with The Wall Street Journal.
Bostic said he had penciled-in only one more quarter-point rate cut this year in the latest Fed “dot-plot.” The projections showed that nine Fed officials were looking for only one more quarter-point cut this year while 10 officials penciled-in two quarter-point cuts.
Even before Bostic’s comments, traders in derivative markets had started to price in the possibility of a pause at either the November or December policy meetings.
Other Fed officials have talked this week about being patient with easing monetary policy.
U.S. stocks were mostly lower in afternoon trade Thursday.
While inflation data came in stronger than expected, it still was easing from levels seen a year ago.
“It certainly tames down the aggressiveness of the Fed” when it comes to its next steps in lowering rates, said Peter Cardillo, chief market economist at Spartan Capital Securities, about Thursday’s inflation data.
The S&P 500 set a record finish on Wednesday, spurring some profit-taking by traders, Cardillo said. He also thinks relatively positive earnings for the third quarter could see the S&P 500 reach 6,000 for the first time.
Boeing Co.’s stock fell again Thursday amid worries about an ongoing strike and the potential that its credit will be downgraded to junk. But the company’s outstanding bonds were again telling a different story.
There was net buying of Boeing bonds focused on the long end of the curve, and spreads were tightening.
“There’s no natural buying in the high-yield world of long bonds, so that could be seen as a vote of confidence that they retain their current ratings,” said one market source.
The following charts from data company BondCliQ Inc. show the trend. The purple arrow and green rectangle highlight the moves.
Boeing Co. bonds: Intraday net customer flow. (BondCliQ Inc.)
Select Boeing Co. bonds: Three-week spread performance. (BondCliQ Inc.)
Micron shares are up 3.6% in afternoon action to rank among the S&P 500’s best performers. Micron, a memory-chip maker, is an AMD partner.
AMD showed off new chips with more memory than prior offerings, highlighting how high-bandwidth memory is becoming increasingly important to powering artificial-intelligence workloads.
(AFP via Getty Images)
