By Sinéad Carew and Lisa Pauline Mattackal
(Reuters) -Wall Street's main indexes closed lower on Thursday as investors looked to higher-than-expected inflation and unemployment claims for indications on the health of the U.S. economy and the path for interest rates.
The closely watched Consumer Price Index rose 0.2% on a monthly basis in September and 2.4% on an annual basis, with both figures being slightly higher than estimated by economists polled by Reuters.
The core figure, which excludes volatile food and energy prices, rose 3.3% year-over-year, versus an estimate of 3.2%.
In a separate report released on Thursday, jobless claims also rose to 258,000 for the week ending Oct. 5, versus an estimate of 230,000.
"Investors were torn between a stronger than expected CPI report and a weaker than expected unemployment claims report," said Jack Ablin, chief investment officer at Cresset Capital in Chicago. "One showed inflation running hotter than expected and the other showed the economy looking weaker than expected. It's the worst of both worlds."
After the economic data, traders were pricing in a roughly 80% probability that the Federal Reserve will cut rates by 25 basis points at its meeting in November and a roughly 20% chance it would leave rates unchanged, according to CME's FedWatch.
Atlanta Federal Reserve Bank President Raphael Bostic on Thursday said he would be "totally comfortable" skipping an interest-rate cut at an upcoming meeting of the U.S. central bank, adding that the "choppiness" in recent data on inflation and employment may warrant leaving rates on hold in November.
Chicago Fed President Austan Goolsbee said he sees "gradual" rate cuts over the next year-and-a-half, while the New York Fed's John Williams said he still sees rate reductions ahead.
The Dow Jones Industrial Average fell 57.88 points, or 0.14%, to 42,454.12, the S&P 500 lost 11.99 points, or 0.21%, to 5,780.05 and the Nasdaq Composite lost 9.57 points, or 0.05%, to 18,282.05.
Both the S&P 500 and the Dow had notched record closing highs in the previous day's session.
Only three of the S&P 500's 11 major industry sectors advanced on Thursday with energy, adding 0.8% and outperforming the rest as oil prices rose. [O/R]
Oil futures rallied as U.S. fuel use spiked ahead of Hurricane Milton, which made landfall on Florida's west coast late on Wednesday. Oil prices are also being supported by supply concerns related to conflicts in the Middle East.
Investors are also preparing for the third-quarter earnings season, with major banks scheduled to report results on Friday.
The third-quarter earnings growth rate for the S&P 500 is estimated to come in at 5% year-over-year, according to estimates compiled by LSEG.
In individual stocks, Delta Air Lines (NYSE:DAL) fell 1% after it forecast quarterly revenue below expectations in anticipation of slower travel spending. Other airlines also lost ground with American Airlines (NASDAQ:AAL), ending down 1.4%.
Shares of Pfizer (NYSE:PFE) fell 2.8% as former executives distanced themselves from activist investor Starboard's campaign against the drugmaker.
On U.S. exchanges, 11.02 billion shares changed hands compared with the 12.06 billion moving average for the last 20 sessions.
Declining issues outnumbered advancers by a 1.39-to-1 ratio on the NYSE where there were 185 new highs and 55 new lows.
On the Nasdaq, 1,616 stocks rose and 2,576 fell as declining issues outnumbered advancers by a 1.59-to-1 ratio. The S&P 500 posted 22 new 52-week highs and 2 new lows while the Nasdaq Composite recorded 60 new highs and 163 new lows.