US stocks slide as investors weigh Fed protocol and earnings

US stocks ended lower for the sixth straight day on Wednesday as a combination of hot inflation data, the start of corporate earnings season and minutes from the Federal Reserve’s latest meeting led to a choppy trading day.

Minutes from last month’s meeting, when the central bank raised its benchmark interest rate by 0.75 percentage point, underscored policymakers’ commitment to bringing inflation down, with “many” officials arguing that “the cost of taking too little action . . . probably outweighed the costs of too many measures”.

However, they also acknowledged concerns about the bleak economic outlook: a minority of officials advocated “calibrating” the pace of rate hikes to minimize the negative economic impact.

Wall Street’s benchmark S&P 500 ended the day down 0.3 percent from a two-year low, reversing gains made shortly after the minutes were released.

The Nasdaq Composite, dominated by high-growth tech stocks considered particularly sensitive to higher interest rates, slipped 0.1 percent.

Treasury prices also rose slightly. The yield on the 10-year government bond, which falls as prices rise, fell 0.04 percentage points to 3.90 percent.

Bob Miller, head of Americas Fundamental Fixed Income Group at BlackRock, said the minutes “reinforced the overall hawkish message” conveyed last month.

“While we expect the Fed to take a more deliberate approach over the next six months and at times consider a pause, it’s probably too early for the Fed to consider pain relief just yet,” he said.

Markets struggled for direction earlier in the day as investors digested hotter-than-expected US producer inflation data and looked ahead to the third-quarter earnings season.

The Producer Price Index, which tracks the prices companies receive for their goods and services, rose 8.5 percent in the year to September, up from 8.7 percent in August but above the 8.4 percent expected by economists. Month-over-month, the prices US producers received for their goods and services rose 0.4 percent — ahead of consensus expectations of 0.2 percent growth and well above a 0.2 percent decline seen in March August was recorded.

Investors have been scrutinizing the inflation data for signs of how vigorously the Federal Reserve and its global peers will tighten monetary policy. Signs of still high inflation have fueled concerns that the US Federal Reserve will raise interest rates more aggressively, and will do so far and fast that it amplifies an economic slowdown.

Such concerns have weighed heavily on stock markets, with the S&P 500 ending its longest run of quarterly losses since the 2008 financial crisis in September.

Markets are pricing in expectations that the Fed will make another three-quarter-point hike at its November meeting after three straight hikes of 0.75 percentage points. His current target corridor is 3 to 3.25 percent.

Wednesday’s PPI report will be followed by a widely-anticipated September CPI on Thursday, with economists polled by Reuters expecting an 8.1 percent rise. That figure would mean a slight decline in August’s annual inflation rate of 8.3 percent.

As US earnings season kicks off this week, investors are keeping a close eye on how consumers and businesses are coping with high prices and rising borrowing costs.

PepsiCo highlighted ongoing inflationary pressures on Wednesday when it said it had hiked prices again and was open to more hikes. Shares of the company rose 4.2 percent as it raised its outlook and said consumer demand had remained resilient.

Attention will shift to the financial sector later in the week with reports from a variety of large corporations including JPMorgan, Morgan Stanley and BlackRock.

Elsewhere, Europe’s regional Stoxx 600 closed 0.5 percent lower. Hong Kong’s Hang Seng lost 0.8 percent.