(Bloomberg) — Stocks dropped after data showed hotter-than-expected inflation and a slowdown in the labor market, highlighting the Federal Reserve’s challenges after it started bringing rates down last month.
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Following a rally to all-time highs, the S&P 500 took a breather. While Thursday’s economic figures were not perceived by Wall Street as catastrophic, they certainly added to the debate on the Fed’s next steps. For now, bond traders only reinforced bets the central bank will reduce the pace of cuts to 25 basis points in November.
The so-called core consumer price index — which excludes food and energy costs — increased 0.3% from August and 3.3% from a year ago. Meantime, applications for US unemployment benefits rose last week to the highest in over a year, reflecting large increases in Michigan, as well as states affected by Hurricane Helene.
In a note titled “The Fed’s quandary as inflation…
