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Investors bored by a drought of news earlier this week had their prayers answered Wednesday with a mess of headlines – yet none of it really gave the market much impetus.
Today's early headline was September's CPI reading, which showed a 5.4% year-over-year in consumer prices that was slightly hotter than the 5.3% expected.
“Some of the transitory components are already moderating, such as airlines, apparels, and used autos. Disruptions due to supply chains not being able to keep up with the spike in demand may take longer but will eventually be fixed,” says Anu Gaggar, Global Investment Strategist for Commonwealth Financial Network. “However, higher rents and wages could prove to be stickier and eat into corporate margins.”
BofA Global Research similarly warns about non-transitory risks. "While one month does not make a trend, this is an early signal of stronger persistent inflation pressures materializing, ultimately supporting continued above-target inflation over the medium term," a team of BofA economists says.
Later Wednesday, minutes of the Sept. 21-22 Federal Reserve meeting showed that it could begin a "gradual tapering process" starting as early as mid-November and ending by mid-2022.
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“In our view, the bar to get moving on asset purchase tapering is very low for the Fed, and in terms of the likely composition of tapering, there appears to be considerable agreement,” says Bob Miller, BlackRock’s head of Americas Fundamental Fixed Income. “Indeed, we already had the impression in July that the reduction in Treasury securities and MBS would occur at the same time, and assuming a November to June 2022 tapering timeline, this would imply a $15 billion reduction in the purchase pace per month, or a faster meeting-by-meeting adjustment schedule.”
The Dow Jones Industrial Average suffered a marginal loss to 34,377. The S&P 500 fared a bit better, up 0.3% to 4,363, while the Nasdaq Composite closed 0.7% higher to 14,571.
Financials (-0.6%) were Wednesday's worst sector. The Dow's performance was hampered by declines in components American Express (AXP, -3.5%), Visa (V, -0.7%) and JPMorgan Chase (JPM, -2.6%) – the latter of which fell despite announcing Street-beating revenues and profits to kick off the Q3 earnings season.
"JPM's pullback today in the face of a fairly positive earnings report does not suggest optimism for banks reporting through the remainder of this week," says David Keller, chief market strategist at StockCharts.com.
Speaking to the charts, Keller adds, "After peaking just above $170, the stock has now rotated below $165 yet again, completing a 'failed breakout' pattern that implies a lack of investor confidence. I would expect further backing and filling for stocks like JPM before any further upside is likely."
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Other news in the stock market today:
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