US: Wall Street indexes fall as data raises uncertainty for rate-cut outlook

US stocks were lower on Thursday, with most sectors down, as economic data increased uncertainty about the outlook for interest rate cuts.

Data showed initial jobless claims dropped 14,000 to a seasonally adjusted 218,000 for the week ended Sep 20. Other data showed the US economy grew faster than previously estimated in the second quarter amid strong consumer spending and business investment.

Chicago Fed President Austan Goolsbee said on Thursday he was uneasy with cutting rates too quickly, with inflation a risk. The comments and data follow the US central bank’s move last week to lower rates by 25 basis points - in its first cut since December.

It also gave indications of more rate cuts ahead, amid weakness in the job market. Investor expectations of another 25 bps cut in the Fed’s October meeting are now at 83.4 per cent, down from about 92 per cent on Wednesday, according to the CME FedWatch Tool.

“The economic data that’s come out over the last day or two is kind of confusing in that, in my mind, it calls into question” how much the Fed may cut rates again and whether the Fed needs to cut rates again this year, said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

All S&P 500 sectors but energy were lower in afternoon trading.

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The Dow Jones Industrial Average fell 215.60 points, or 0.46 per cent, to 45,906.96, the S&P 500 lost 42.51 points, or 0.64 per cent, to 6,595.55 and the Nasdaq Composite lost 159.04 points, or 0.71 per cent, to 22,338.87.

In addition, shares of Accenture were down 3 per cent even after the consulting firm reported revenue above expectations.

CarMax shares were down 19 per cent after the used-car retailer reported lower second-quarter profit.

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Investors are eager to hear soon from more companies on their quarterly results, especially with valuations considered high after a run of record highs recently.

Investors are bracing for Friday’s release of the Personal Consumption Expenditures price index, the Fed’s preferred inflation measure, which could shape expectations for the path of interest rates.

Declining issues outnumbered advancers by a 3.54-to-1 ratio on the NYSE. There were 88 new highs and 102 new lows on the NYSE. On the Nasdaq, 1,103 stocks rose and 3,443 fell as declining issues outnumbered advancers by a 3.12-to-1 ratio. REUTERS