US equities opened lower on Wednesday as September's consumer price index (CPI) came in slightly above forecasts, driving Treasury yields higher and pressuring valuations. Investors also weighed mixed quarterly results from major banks and continued weakness in semiconductor shares.
The Nasdaq Composite fell 0.7%, while the S&P 500 slipped 0.42%. The Dow Jones Industrial Average managed a modest gain of 65 points, supported by a few defensive sectors.
Hotter CPI lifts yields
The Labor Department reported that headline CPI rose 0.6% month over month in September, matching expectations. On an annual basis, inflation accelerated to 3.7%, exceeding the 3.6% consensus forecast. Core CPI, which strips out food and energy, increased 0.3% from August and 2.6% year over year, both slightly above the anticipated 0.2% and 2.5%.
Energy costs were the primary driver. Gasoline prices jumped 9.1% month over month, accounting for more than half of the headline increase, and the energy index surged 20.4% from a year ago. With oil prices hovering near $95 per barrel, concerns about household budgets and the Federal Reserve's policy path intensified.
Treasury yields climbed following the data. The 10-year note yield rose more than six basis points to 5.278%, while the 30-year yield added over two basis points to 5.59%. Higher yields increase borrowing costs and make bonds more attractive relative to equities, weighing on stock valuations.
Bank earnings disappoint
Investors parsed another round of bank results, with several major lenders failing to impress. Bank of America shares dropped 7% after the company reported lower third-quarter profit and set aside $1.2 billion in provisions related to federal penalties for failing to detect potentially illicit activity. The penalties, announced a day earlier, totaled more than $1.2 billion.
Morgan Stanley posted higher quarterly income, buoyed by strong equity trading revenue, but its shares also declined. The results followed a mixed session on Tuesday, when JPMorgan Chase and Goldman Sachs saw shares fall after fixed-income trading revenue missed estimates. Citigroup was among the weakest performers in the sector.
BlackRock, however, reported higher third-quarter profit as fees from managing client assets increased, and its shares rose at the open.
Chip stocks extend slide
Technology shares remained under pressure as semiconductor stocks continued their recent decline. Micron Technology fell 1.4% after losing more than 3% in the prior session. Advanced Micro Devices and Intel dropped over 2.4%, while SanDisk declined 2%.
The selloff reflects investor reassessment of technology valuations and the financing needs of artificial intelligence companies. Questions about 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 robust. FactSet data indicate that S&P 500 companies are projected to report blended earnings growth of around 30% in the third quarter. Semiconductor and semiconductor equipment companies are expected to deliver growth of approximately 130%, making the sector a major contributor to the overall earnings outlook.
This article is for informational purposes only and does not constitute financial advice.
