NEW YORK –
Stocks on the New York Stock Exchange closed mixed on Wednesday after a highly anticipated report showed inflation rose last month in the United States, but not by much more than expected.
The S&P 500 rose 5.54 points, or 0.1%, to close at 4,467.44 after swinging between small gains and losses several times throughout the day. The Dow Jones Industrial Average fell 70.46 points, or 0.2%, to 34,575.53, and the Nasdaq Composite rose 39.97 points, or 0.3%, to 13,813.59.
The modest moves came after an immediate choppy reaction to the inflation report in financial markets, where bond yields and stock prices fluctuated several times. According to the report, American consumers paid 3.7% higher prices last month than a year earlier, compared with an inflation rate of 3.2% in July.
That’s discouraging for consumers who pay higher prices, but much of the acceleration was due to higher fuel costs, which can fluctuate very widely and quickly. Regardless of these factors, underlying inflation trends still point to a continued slowdown, economists say. Inflation has generally cooled since peaking above 9% last year.
The inflation report has been long-awaited as it will serve as a guide to the Federal Reserve’s next interest rate actions. The Fed has already raised its key interest rate to its highest level in more than two decades, hurting stock prices and other investments, and there is hope on Wall Street that inflation has cooled enough to stabilize at acceptable levels .
Although economists are willing to ignore fuel costs when analyzing inflation to identify underlying trends, households and businesses don’t have that luxury.
Airline stocks were among the biggest losers in the S&P 500 after some of them warned of a decline in profits due to rising prices.
American Airlines cut its summer profit forecast because of higher-than-expected fuel prices. The company also had to pay about $230 million in back pay to pilots after they ratified a new employment contract. Its shares fell 5.7%.
Other airlines also fell, with United Airlines down 3.8% and Delta Air Lines down 2.8%.
On the winning side on Wall Street were high-growth stocks that could be the big beneficiaries if the Federal Reserve finally completes its rate hikes. High interest rates affect all types of investments, but they tend to hurt technology companies and other companies that promise high long-term growth.
The yield on the 10-year Treasury note fell to 4.26% from 4.27%. Immediately after the inflation report it had risen to 4.34%.
