U.S. stocks gave back earlier gains Friday, while the dollar and Treasury yields steadied, as investors looked to close out the month of September on a high night while tracking inflation data at home and aboard.
Stocks booked solid gain yesterday following GDP data that confirmed a slowdown in consumption, a key metric to underlying price pressures, that is likely to be confirmed later this morning when the Bureau of Economic Analysis releases its August update of the Federal Reserve's preferred inflation gauge.
That optimism was boosted by data this morning from Europe, which showed the biggest drop in core inflation in more than three years in the world's biggest economic bloc in September, with headline inflation falling to a two-year low of 4.3%.
The BEA reported that its core reading of consumer price pressures eased again in August, falling below the 4% for the first time in two years, as consumer spending continues to slow into the autumn months.
That's pushed global government bond yields lower across the board, with benchmark U.S. Treasury notes – which have largely dictated trading on Wall Street this week – easing to 4.567% in afternoon New York trading.
Benchmark 2-year notes were also in retreat, falling to 5.044%, while the U.S. dollar index was marked 0.13% lower against a basket of its global peers at 106.085
The S&P 500 was marked 17 points, or 0.42% lower, heading into the final hours of trading while the Dow Jones Industrial Average was marked 200 points lower. The tech-focused Nasdaq was up 10 points amid the modest pullback in Treasury yields.
The softer U.S. dollar, however, also allowed global oil prices to rise over the final day of the month, although gains faded in afternoon trading with Brent futures contracts for November delivery down 6 cents to $95.32 per barrel and WTI contracts for the same month down $1.01 at $90.70 per barrel, after hitting a one-year high of $95 earlier in the week.
House Republicans also passed three of the four spending bills needed to potentially avoid a weekend government shutdown, but remain a long way from consensus on a budget agreement. Speaker Kevin McCarthy is also refusing to consider a bipartisan Senate bill, passed earlier this week, that would offer funding until mid-November.
Overnight in Asia, the region-wide MSCI ex-Japan jumped 1.21% thanks in part to the pullback in the dollar and market closures in China, while the Nikkei 225 slipped 0.05% in Tokyo.
In Europe, the Stoxx 600 closed 0.38% higher in Frankfurt as the softer-than-expected inflation data pared bets on future European Central Bank rate hikes, while Britain's FTSE 100 was up 0.08% in London.
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