U.S. stocks rose on Thursday as Treasury yields continued to ease, while investors awaited the release of the minutes from the Federal Reserve’s September meeting. The Dow Jones Industrial Average gained 0.16%, the S&P 500 added 0.14%, and the Nasdaq Composite advanced 0.36%1.
The market was supported by data showing that consumer prices rose more than anticipated in September, but at a slower pace than in previous months. The core consumer price index (CPI), which excludes food and energy, increased 0.2% month-over-month and 4% year-over-year, slightly above the consensus estimates of 0.1% and 3.9%, respectively2. The headline CPI rose 0.4% month-over-month and 5.4% year-over-year, matching the expectations2.
The inflation data suggested that some of the price pressures that have been weighing on the economy and the markets may be starting to ease, or at least not worsen. This could give the Fed more room to maintain its accommodative monetary policy stance, which has been a key driver of the stock market rally.
However, investors were also looking ahead to the Fed minutes, which were due to be released at 2 p.m. ET, for more clues on the central bank’s plans to taper its $120 billion monthly bond purchases. The Fed signaled in its September statement that it could start reducing its asset purchases as soon as November, depending on the economic data3.
Some analysts said that the Fed minutes could reveal some divisions among the policymakers over the timing and pace of tapering, as well as the conditions for raising interest rates in the future. The Fed has said that it expects to keep rates near zero until at least late 2023, but some market participants have priced in a rate hike as early as next year4.
The market was also watching the developments in Washington, where lawmakers were still trying to reach a deal on raising the debt ceiling and passing President Joe Biden’s $3.5 trillion social spending plan. The Treasury Department has warned that it could run out of cash by October 18 if Congress does not act soon5.
Among individual stocks, Boeing (NYSE:BA) rose 1.6% after reporting better-than-expected third-quarter deliveries of its commercial and defense aircraft. Tesla (NASDAQ:TSLA) gained 1.9% after announcing that it will open its network of Superchargers to other electric vehicles by the end of this year. Walgreens Boots Alliance (NASDAQ:WBA) fell 2.8% after posting mixed quarterly results and lowering its full-year guidance.