LIVE MARKETS-US stocks slide as hot inflation cools risk appetite

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US STOCKS SLIDE AS HOT INFLATION COOLS RISK APPETITE

Wall Street retreated on Wednesday as hot inflation data, mixed earnings and rising oil prices doused investor risk appetite.

All three major US stock indexes closed lower on the day, with a 4.3% slide in chips .SOX dragging the Nasdaq .IXIC down 1.9%, the tech-loaded index's biggest one-day drop since July 23.

The session's biggest catalyst arrived before the opening bell in the form of the Labor Department's consumer price index (CPI), which showed inflation heating up as energy price pressures related to the Iran war — now in its eighth month — morphed into the sort of broad, systemic inflation that provokes rate hikes from the US Federal Reserve.

Markets generally expect one more 25-basis-point rate hike before the year is out, and bets are growing that the Fed funds target rate will be 50 bps higher before 2027 rolls around, according to CME's FedWatch tool.

Long-dated US Treasury yields turned lower as the CPI shock wore off, but the yield on 2-year notes, which reflect Fed policy expectations, advanced.

Front-month WTI and Brent crude settled up 1.0% and 0.4%, respectively, as Houthis attacked Saudi Aramco's headquarters and Iran said it was deploying new tactics to target ships and keep oil prices high.

Third-quarter earnings season, still in its infancy, continues to be mixed. Bank of America BAC.N missed profit expectations while Morgan Stanley MS.N and BlackRock BLK.N surpassed analyst estimates.

Earnings on tap for Thursday include US Bancorp USB.N, Charles Schwab SCHW.N and JB Hunt JBHT.O, the last of which could offer some insight regarding the effect of soaring diesel prices on trucking, and the movement of goods.

On the economics front, yet another inflation indicator, the Labor Department's producer price index, is expected, as is retail sales data courtesy of the Commerce Department. Empire State, Philly Fed and jobless claims complete the crowded docket.

Here's your closing snapshot:

(Stephen Culp)

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