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U.S. Stocks Close Lower Despite Dip in Consumer-Price Inflation

Easing inflation pressure could give the Fed more room to monitor incoming data and Covid infections before tightening.

U.S. stocks closed lower Tuesday, as a dip in consumer-price inflation failed to help the market.

With companies from Apple  (AAPL) - Get Apple Inc. (AAPL) Report to Macy's  (M) - Get Macy's Inc Report to 3M Co.  (MMM) - Get 3M Company Report cautioning on the impact of supply chain disruptions and rising input costs, factory-gate inflation is holding at the highest levels in 13 years.

Consumer prices, however, are starting to moderate, with headline inflation slowing to 5.3% year-on-year and core prices rising at the weakest pace since February. Headline inflation was 5.4% in June and July.

The data should support the Federal Reserve's narrative that inflation pressures will begin to ease over the first few months of 2022. 

It also may give Chairman Jerome Powell and his colleagues another month or two of breathing room to monitor incoming data and the pace of Covid-19 infections before tightening policy.

That said, the world's biggest fund managers appear less concerned about tapering, according to Bank of America's benchmark September survey. They're more focused on slowing growth, muted corporate profits and the potential for negative inflation some time next year.

Surging Inflation Is a U.S. Phenomenon, Not a Global One

The Dow Jones Industrial Average closed down 0.84%, while the S&P 500 slipped 0.57%. The Nasdaq Composite lost 0.45%. 

The 10-year Treasury note yielded 1.28%, down 5 basis points on the CPI data.

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Oil prices were little changed, after hitting a six-week peak earlier. Oil was boosted by continued disruption from hurricanes in the Gulf of Mexico.

Brent traded at $73.58 per barrel, while WTI traded at $70.38 per barrel.

Apple shares were active, falling 1%, as it held its latest product event.

The company earlier was hit by an iPhone security embarrassment just hours ahead of the launch event in Cupertino, Calif

Oracle  (ORCL) - Get Oracle Corporation Report shares stumbled 3% after the cloud computing and software group posted weaker-than-expected first quarter sales that offset solid profits and a firm near-term outlook.

Cloud services and license revenues, its key growth driver, rose 6% to $7.4 billion, but didn't assuage investor concerns that cloud rivals like Microsoft and Amazon are taking some of Oracle's hoped-for market share.

Boeing  (BA) - Get Boeing Company Report shares slid 1%, after the world's biggest plane maker published its annual industry forecast that indicates global demand for commercial aircraft hasn't yet returned to pre-pandemic levels.

Chevron  (CVX) - Get Chevron Corporation Report shares fell 2%, after initially rising as the group said it would triple its capital investment plans over the coming years, while affirming its near-term cash flow forecasts. The oil major is accelerating its transition to lower carbon businesses amid reports of an activist investor challenge.

Away from the U.S., European stocks dipped. The Stoxx 600 index eased 0.34%, dragged down by mining stocks.

In Asia, the MSCI Asia ex-Japan index slid 0.94%. Japan's Nikkei 225 hit a fresh 1990 high, closing at  30.670.10. The government unveiled data showing that more than half of the country's 126 million people have been fully vaccinated.