Stocks fall as inflation worries dampen earnings

U.S. stocks fell on Wednesday as investors weighed mixed corporate earnings and signs of lingering inflationary pressures.

The benchmark S&P 500 gauge closed down 0.7%, reversing price after two days of strong gains. The tech-heavy Nasdaq Composite fell 0.9%. In Europe, the regional Stoxx 600 closed down 0.5%.

Consumer goods groups Procter & Gamble and Nestlé became the latest companies to point to the effect of inflation when they reported their third-quarter results on Wednesday.

Both groups reported falling sales volumes in the three months to September, and Nestlé chief executive Mark Schneider said the Swiss group would raise prices further to pay for energy and labor costs. – higher labor costs. Ohio-based P&G took a further hit from the strong dollar.

Investors pay close attention to corporate advice on price levels and the effect of higher costs. Central banks led by the US Federal Reserve have tightened monetary policy aggressively this year in an effort to rein in rising prices, but the speed and scale of the changes have raised concerns that economies could be pushed into recession.

The Fed has raised borrowing costs by 0.75 percentage points at each of its past three meetings, bringing its target range to 3-3.25%, and is expected to do the same at its next meeting.

In the UK, data released earlier on Wednesday showed annual inflation accelerating in September to 10.1% from 9.9% in August, due to rising food prices. The latest reading of the consumer price index was above the consensus of 10% among economists polled by Reuters.

Outside of the consumer sector, earnings reports were mixed. Shares of Netflix jumped 13% on Wednesday after posting positive results after Tuesday’s closing bell. The streaming group shocked investors in April when it revealed subscriber growth had reversed, but said on Tuesday it had stemmed its subscriber losses in the third quarter. Popular programs such as stranger things had helped him add 2.4 million subscribers, more than double the number the streaming group predicted.

Healthcare group Abbott Laboratories, on the other hand, fell 6.5% as the strong dollar weighed on its international sales.

The S&P 500 was still in positive territory for the week after strong Monday and Tuesday, but Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note that “we don’t expect a sustained turnaround any time soon. “.

“In fact, the risk-reward outlook for markets has turned unfavorable in the near term, in our view, reflecting a combination of persistent inflation, rising rates, falling growth estimates and heightened financial stress.”

In government debt markets, the yield on the 10-year US Treasury rose 0.13 percentage points to 4.13% as the price of the instrument fell.

The UK 10-year equivalent yield fell 0.03 percentage point to 3.88%. The 30-year gilt yield fell more than 0.2 percentage points to just below 4% for the first time in more than two weeks, Tradeweb data showed, following a decision Bank of England to exclude longer-term debt when it begins bond sales next month.

The pound lost 0.9% against the dollar at $1.12, while the greenback gained 0.7% against a basket of six peers. The yen hit a new 32-year low against the US currency at ¥149.89.

The Japanese currency has fallen more than 20% this year, its decline fueled by a widening gap between the ultra-loose monetary policy of the Bank of Japan and the tightening trend displayed by many other global central banks.

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