Stock Market News Today: Markets end lower after hot CPI data; big banks in

U.S. stocks on Thursday ended in the red, as a surge in Treasury yields put pressure on equities. Sentiment also took a hit from hotter than expected consumer inflation data.

Results were also in focus, with companies such as Delta Air Lines (DAL) and Walgreen Boots Alliance (WBA) kicking off the third quarter earnings season. Focus turns to big banks reporting on Friday.

The tech-heavy Nasdaq Composite (COMP.IND) retreated 0.63% to close at 13,574.22 points. The benchmark S&P 500 (SP500) declined 0.62% to settle at 4,349.61 points, while the blue-chip Dow (DJI) slipped 0.51% to finish at 33,631.14 points.

Nine of the 11 S&P sectors ended in negative territory, led by rate-sensitive names such as Utilities and Real Estate. Technology and Energy were the two gainers.

A day after markets received hotter-than-anticipated producer price index (PPI) data, headline consumer price index (CPI) for September came in at +0.4% M/M, higher than the consensus figure of +0.3%. Core CPI, which excludes food and energy, increased 0.3% M/M compared to an anticipated rise of 0.3%.

According to the CME FedWatch tool, the odds of the Federal Reserve holding rates steady at its November meeting were little changed. However, the probability of a quarter-point hike at the December meeting has bumped up slightly to 31.4% from 26.3% a day ago.

Treasury yields rose after the CPI data. Moreover, a closely-watched $20B 30-year note auction tailed, a day after the 10-year auction also disappointed. The longer-end 30-year yield (US30Y) surged to a session high of 4.89%. The 10-year yield (US10Y) was up 11 basis points to 4.71%, while the 2-year yield (US2Y) – which is more sensitive to upcoming rate decisions – was up 6 basis points to 5.07%.

See how Treasury yields have done across the curve at the Seeking Alpha bond page.

Thursday’s economic calendar also showed that the number of Americans filing for initial jobless claims the past week remained near historical lows, pointing to continued resilience in the labor market.

“Another one of those days. Inflation didn’t just come in slightly higher than expected, but it was yet another indication that the fight against inflation isn’t over. Sticky inflation is the last thing the Fed needs in a scenario of weakening economic growth, high oil prices, and a whole new layer of geopolitical risks,” Leo Nelissen, part of investing group iREIT on Alpha, told Seeking Alpha.

“In light of higher yields, delicate sectors like consumer staples and real estate stocks suffered the most. These sectors have eroding pricing power and feel the pressure of weakening economic demand. Unless inflation comes down or economic growth remains strong, we’re headed toward a stagflation scenario. While the Fed isn’t talking about that yet, the market is starting to price it in. I see no end to this volatile market for the next few months – maybe quarters,” Nelissen added.

Turning to earnings, Delta Air Lines (DAL) ended slightly higher, after the number one U.S. carrier reporting quarterly results that handily beat estimates on strong demand and improving business travel.

Dow 30 component Walgreens Boots Alliance (WBA) closed marginally lower, after the pharmacy chain posted a quarterly earnings miss and soft guidance.

Major banks JPMorgan (JPM) and Citigroup (C) will be reporting on Friday, along with insurance giant UnitedHealth (UNH).

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