Wall Street had a turbulent day today, as investors grappled with rising inflation, debt-ceiling uncertainty and mixed earnings reports. The Dow Jones Industrial Average fell 1.6%, or 400 points, to close at a new low for 2022. The S&P 500 and the Nasdaq Composite also declined, losing 1.3% and 0.9%, respectively.
One of the main drivers of the market sell-off was the latest inflation data, which showed that consumer prices rose 5.4% in September from a year ago, matching the highest level since 2008. The core inflation rate, which excludes food and energy, was 4%, slightly below expectations but still elevated.
The inflation report added to the pressure on the Federal Reserve, which is expected to announce its plans for tapering its bond-buying program at its next meeting in November. Some analysts believe that the Fed may have to raise interest rates sooner and more aggressively than anticipated to rein in inflation.
Another source of anxiety for investors was the looming deadline for raising the debt ceiling, which could trigger a default on U.S. government obligations if not resolved by mid-October. House Speaker Nancy Pelosi said that she expects the House to vote on a bipartisan deal to suspend the debt limit until December 2022 as soon as next week, but it remains unclear whether it will pass the Senate.
Meanwhile, earnings season kicked off with mixed results from some of the biggest companies in the U.S. Walmart reported better-than-expected sales and profit for the third quarter, boosted by strong demand from younger and wealthier shoppers. The retail giant also raised its full-year outlook and announced a $20 billion share buyback program. However, its shares fell 1.7% as investors worried about rising costs and supply chain disruptions.
On the other hand, Morgan Stanley rose 2.3% after announcing that its longtime CEO James Gorman will retire next year and be succeeded by Ted Pick, who currently heads its investment banking and trading division. The bank also beat analysts’ estimates for revenue and earnings, driven by strong performance in its wealth management and institutional securities segments.
Other notable movers included Foot Locker, which surged 11% after raising its guidance and announcing a $750 million acquisition of WSS, a footwear retailer focused on Hispanic customers; Catalent, which jumped 9% after reporting better-than-expected earnings and revenue; and Occidental Petroleum, which gained 6% after Warren Buffett’s Berkshire Hathaway disclosed that it bought more shares of the oil company.
Looking ahead, investors will be watching for more earnings reports from major companies such as Netflix, Nike and Deere in the coming days, as well as economic data on housing, manufacturing and consumer sentiment.