NEW YORK (AP) — U.S. stocks are drifting, and yields are climbing Thursday following mixed economic reports that offered no slam-dunk clues about where interest rates are heading.
The S&P 500 was down 0.1% in midday trading, with four out of five stocks in the index lower. It's threatening to break a four-day winning streak, its longest since August.
The Dow Jones Industrial Average was down 84 points, or 0.3%, as of 11 a.m. Eastern time, and the Nasdaq composite was edging up by 0.1%.
The stock market has largely been taking its cue from the bond market recently, and rising yields tightened their squeeze after a report showed inflation at the consumer level was a touch higher last month than economists expected.
That raises worries about the Federal Reserve keeping its main interest rate high for a long time, as it tries to undercut inflation by knocking down investment prices and slowing the economy.
But the inflation report also had more encouraging nuggets for financial markets underneath the surface. After ignoring prices for food and fuel, which Fed officials see as a better predictor of where inflation is heading, prices that consumers had to pay last month were in line with expectations. They also continued to decelerate from earlier months.
Another report said slightly fewer U.S. workers applied for unemployment benefits last week than expected. That, too, offered both encouragement and caution for markets. On one hand, it indicates a job market with few layoffs, which means strength for the overall economy. But it could also be adding fuel to keep upward pressure on inflation.
Following the reports, the 10-year Treasury yield rose to 4.65% from 4.56% late Wednesday. The two-year Treasury yield, which more closely tracks expectations for the Fed, climbed to 5.06% from 4.99%.
Yields are still down for the week so far. They had jumped last week to their highest levels in more than a decade on expectations that still-high inflation would mean a tougher Fed.
But yields regressed following some speeches that investors saw as hints that the Fed is considering not hiking its main interest rate anymore. The jump in the 10-year Treasury yield has pulled mortgage rates to their highest levels since the turn of the millennium, and such moves could slow the economy without any more hikes to overnight interest rates by the Fed.
Nothing in Thursday’s inflation report should sway the Fed one way or the other when it comes to what it will do on Nov. 1, when it announces its next move on interest rates, said Seema Shah, chief global strategist at Principal Asset Management. She called the data “reassuringly uneventful.”
“The question around whether or not there will be one more interest rate hike is yet to be answered,” she said.
Rising crude oil prices have put extra pressure on inflation since the summer, and they rallied again Thursday. A barrel of benchmark U.S. crude rose 1.7% to $84.92. Brent crude, the international standard, gained 1.6% to $87.17 per barrel.
After jumping since the summer and then regressing a couple weeks ago, crude prices have been volatile following the latest fighting in Gaza. The worry is the violence could lead to disruptions in the supply of petroleum.
Higher oil prices add costs across the economy, and airlines are particularly hurt because fuel is one of their biggest expenses.
Delta Air Lines fell 2% despite reporting stronger profit for the summer than analysts expected. It also said it’s seeing encouraging trends for bookings going into the holiday season.
It’s at the head of a reporting season for S&P 500 companies that could mark a return to profit growth following three straight quarters of declines.
Several financial giants will report on Friday, including Citigroup, JPMorgan Chase and Wells Fargo, along with UnitedHealth Group.
Ford Motor slumped 2.1% after the United Auto Workers union significantly escalated its walkout against Detroit automakers. In a surprise move, 8,700 workers left their jobs at a Ford truck plant in Louisville, Kentucky.
In stock markets abroad, indexes were mixed in Europe after rising sharply in much of Asia.
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AP Business Writer Yuri Kageyama contributed.
