U.S. stocks fell with investors bracing for Thursday’s reading on consumer prices. Treasuries gained, while U.K. markets were roiled once again by confusion over the country’s policies.

The S&P 500 slipped into the red in the final minutes of trading, capping six days of losses to close at the lowest level since November 2020 and surpassing the previous low on Sept. 30. Equities faded a brief rally after minutes from the Federal Reserve’s last meeting suggested some officials may consider calibrating the pace of rate increases. The consumer price reading will be the last major data point before the central bankers meet next month.

“The market is waiting for the CPI print tomorrow more than it was waiting for minutes,” according to Sarah Hunt of Alpine Woods Capital Investors. “There may be a little hint of relief on the ‘calibrate’ statement, but I think that with the speed of hikes so far it would be irresponsible not to have some sort of possible slowdown coming in hikes, even if it isn’t a cessation in hikes.” 

Data Wednesday showed prices paid to U.S. producers rose in September by more than expected ahead of a key measure of consumer inflation due Thursday that’s set to return to a four-decade high. 

Comments by Minneapolis Fed chief Neel Kashkari earlier Wednesday reaffirmed policy makers’ commitment to the current rate-hike path, saying the bar for a pivot away from monetary policy tightening is “very high.”

More market comments

• “Should tomorrow’s CPI print come in above what the market is expecting, today’s somewhat blasé reaction to the minutes, and the PPI report, could be tested, particularly by bond yields,” said Quincy Krosby, chief global strategist at LPL Financial. “If rates on the 10-year Treasury inches closer to 4 per cent, and the 2-Year Treasury follows suit, the market could have a rough day before the market turns its focus towards a broad reading of bank earnings and guidance.”
• “There was a lot of negativity and worry out there. I think the minutes allow investors to walk back their fears a bit,” said Mike Zigmont, head of trading and research at Harvest Volatility Management.
• “The silver lining was that some Fed participants did acknowledge that further tightening would have to be monitored in the context of the uncertain global environment, which is a nod to the bulls,” said Joe Gilbert, portfolio manager at Integrity Asset Management.
• “Prices remain elevated so it shouldn’t be a surprise to see producer goods and services rise,” Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office, wrote. “No doubt the Fed still has its work cut out for them, and if tomorrow’s CPI read is hot, don’t be surprised to see some investors come to grips with how long the road to tamer inflation may be.”

On the corporate front, PepsiCo Inc. jumped the most in more than two years after lifting its forecast for the year on the back of better-than-estimated third-quarter profit as drink and snack sales buck inflation. Moderna Inc. surged after Merck & Co. said it would exercise an option to work in partnership with the biotech on a messenger RNA cancer vaccine. The reporting season will kick off in earnest Friday with results from banks including JPMorgan Chase & Co. and Citigroup Inc. 

A selloff in long-maturity U.K. debt gathered pace after the Bank of England damped hopes it would extend its bond-buying support into next week. The yield on 30-year gilts surged above 5 per cent, nearing levels that just last month drew the central bank’s intervention, before easing again after the BOE snapped up billions in its daily operations.

Elsewhere,  oil in New York dropped below US$88 a barrel on slowdown fears. OPEC trimmed projections for the amount of crude it will need to pump this quarter, while Russia’s President Vladimir Putin said any energy infrastructure in the world is at risk after the explosions on the Nord Stream pipelines.

NATO Secretary General Jens Stoltenberg urged alliance members to step up supplies of air defense systems to Ukraine, condemning Russian strikes. In China, Shanghai is quietly shutting down schools and a raft of other venues as officials try to rein in a flareup that’s hit the financial hub.

Key events this week:

• Earnings this week include: JPMorgan Chase & Co., Citigroup Inc., Morgan Stanley, BlackRock Inc., Delta Air Lines Inc., UnitedHealth Group Inc., U.S. Bancorp, Wells Fargo & Co.
• FOMC minutes for September meeting, Wednesday
• Fed’s Michelle Bowman and Neel Kashkari speak
• ECB’s Christine Lagarde speaks
• U.S. CPI, initial jobless claims, Thursday
• G-20 finance ministers and central bankers meet, Thursday
• China CPI, PPI, trade, Friday
• U.S. retail sales, business inventories, University of Michigan consumer sentiment, Friday
• BOE emergency bond buying is set to end, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.3 per cent as of 4 p.m. New York time
• The Nasdaq 100 was little changed
• The Dow Jones Industrial Average was little changed
• The MSCI World index fell 0.3 per cent

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at US$0.9702
• The British pound rose 1.1 per cent to US$1.1093
• The Japanese yen fell 0.7 per cent to 146.84 per dollar

Cryptocurrencies

• Bitcoin rose 0.7 per cent to US$19,145.69
• Ether rose 1.2 per cent to US$1,297.45

Bonds

• The yield on 10-year Treasuries declined five basis points to 3.89 per cent
• Germany’s 10-year yield advanced two basis points to 2.31 per cent
• Britain’s 10-year yield was little changed at 4.44 per cent

Commodities

• West Texas Intermediate crude fell 2.5 per cent to US$87.11 a barrel
• Gold futures fell 0.3 per cent to US$1,681.30 an ounce