Wall St. mixed as CPI data boosts December rate hike odds
(Reuters) - Wall Street was mixed in early afternoon on Thursday after a Labor Department report showed consumer prices rose more than expected in August, boosting the odds of a third interest rate hike this year.
The S&P and Nasdaq came under pressure due to an Amazon-led decline in consumer discretionary shares and an Apple-led drop in technology stocks, while a jump in Boeing propped up the Dow.
The firming in inflation, along with a weekly jobless claims report that showed the labor market stays near full employment, could cause the Federal Reserve to consider raising rates in December. The Fed has its next policy meeting on Sept. 19-20.
"I don't think the market was expecting that kind of a strength in terms of inflation," said Victor Jones, director of trading at TD Ameritrade.
The strong CPI data sent U.S. Treasury yields higher, with the two-year yield hitting a seven-week peak. The odds of a hike in December topped 50 percent for the first time since July, according to CME Group's FedWatch tool.
"With bond market doing so well and investors' risk appetite maintained at current levels, they are rotating out of some asset classes like technology," Jones said.
At 12:36 p.m. ET, the Dow Jones Industrial Average <.DJI> was up 25.82 points, or 0.12 percent, at 22,184 and the S&P 500 <.SPX> was down 2.63 points, or 0.11 percent, at 2,495.74.
Both indexes eked out new intraday highs.
The Nasdaq Composite <.IXIC> was down 21.71 points, or 0.34 percent, at 6,438.48. The index, along with the Dow and S&P closed at record highs on Wednesday.
Six of the 11 major S&P sectors were lower.
The consumer discretionary index <.SPLRCD> was down 0.51 percent, led by declines of more than 1 percent in Amazon <AMZN.O>, Disney <DIS.N> and Charter Communications <CHTR.O>.
The tech index <.SPLRCT> dropped 0.21 percent, led by a 0.6 percent drop in Apple <AAPL.O> and a roughly 1 percent decline in Facebook <FB.O> and Alphabet <GOOGL.O>.
The industrials index <.SPLRCI> was up 0.18 percent. Boeing <BA.N> rose 1.3 percent after it won a U.S. defense contract and said it would raise production of the 787 Dreamliner jets.
Pfizer <PFE.N> was among the best performing health stocks, rising 2 percent after the company announced positive trial results for a prostate cancer drug.
Advancing issues outnumbered decliners on the NYSE by 1,474 to 1,313. On the Nasdaq, 1,436 issues fell and 1,333 advanced.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Savio D'Souza)
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