NEW YORK (AP) — The U.S. stock market is recovering its losses for September on Wednesday and on track to finish the month with a small gain after an encouraging report said inflation wasn’t as bad across the United States last month as economists expected.
But data reports also suggested the U.S. economy continues to chug along at a solid pace, even with all the challenges facing it, and that helped keep yields high in the bond market. That in turn
kept up the pressure weighing on all financial markets.
The S&P 500 rose 0.3% and was on track to eke out a 0.1% gain for September. The Dow Jones Industrial Average was down 229 points, or 0.4%, with a little less than an hour remaining in trading, and the Nasdaq composite was 0.9% higher.
Stocks had been heading toward bigger gains in the morning following the report on inflation, which said the cost of living for U.S. consumers was 3.4% higher overall in August than a year earlier. That was not as bad as the 3.7% inflation rate that economists expected, even if it remained worse than the Fed’s 2% target.
The report followed others from earlier in the month about inflation during August, but it's the one that the Federal Reserve prefers to use.
Shorter-term yields fell after the report as traders pared bets that the Fed will raise its main interest rate next month to get inflation further under control. They now see just a 35% chance of that, down from the coin flip’s chance seen a day earlier, according to data from CME Group.
That helped the yield on the two-year Treasury edge down to 4.88% from 4.89% late Tuesday.
But longer-term yields held steadier or rose in the bond market. That's because worries about high inflation are just one of the reasons yields have jumped in the United States and around the world.
The seemingly solid U.S. economy is another, and a report on Wednesday said its growth was even stronger during the spring than earlier estimated. A separate report, meanwhile, said growth in business activity in the Midwest was better than economists expected.
Other factors sending yields higher are also continuing to churn, including worries about the big debt loads that Washington and other governments worldwide are supporting.
Oil prices, meanwhile, rose in their latest swings amid uncertainty about when the war with Iran will allow the flow of crude to be fully restored. Brent crude, the international standard, climbed 1.9% to settle at $98.03 per barrel.
It all helped the yield on the 10-year Treasury, which is the centerpiece of the bond market, drop as low as 5.20% in the morning before rising to 5.29%. That's up from 5.26% late Tuesday, and it's back to where it was more than two decades ago in 2002.
The 30-year Treasury yield, which takes into account expectations for inflation and economic growth many years down the line, climbed to 5.64% from 5.59% late Tuesday.
Higher yields slow the overall economy by making borrowing money more expensive for everyone, while undercutting prices for all kinds of investments.
On Wall Street, Hewlett Packard Enterprise nevertheless helped drive the market higher after rising 5.8%. It increased its forecast for revenue from its networking business, which is benefiting from the boom in artificial-intelligence technology.
MongoDB climbed 4.7% after saying its board boosted the database company's program to send cash to shareholders through buybacks of its own stock by $1 billion. That helped MongoDB recover some of its sharp loss from earlier in the week, after it said Chirantan “CJ” Desai was stepping down as CEO for a senior role at Meta Platforms.
Such gains helped offset a 2.2% drop for Cal-Maine Foods after the country's largest egg company reported a larger loss for the latest quarter than analysts expected. With plenty of eggs available in the market, Cal-Maine Foods saw a sharp drop in prices it could charge, compared with a year earlier.
In stock markets abroad, indexes dipped in Europe following a mixed finish in Asia. Japan’s Nikkei 225 jumped 1.9%, while France’s CAC 40 fell 0.9% for two of the world’s bigger moves.
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AP Business Writers Yuri Kageyama and Michelle Chapman contributed to this report.
