Stock market today: Dow, S&P 500 jump to fresh records as key CPI report looms

It's not just the S&P 500 and Dow Jones Industrial Average setting records. Both the Industrials (XLI) and Financials (XLF) sector ETFs also closed at record highs on Wednesday.

This marked the first record high for XLF since late August, in the latest sign that the recent push to record highs has been partly driven by stocks outside of Big Tech.

September's Consumer Price Index (CPI) will serve as the latest test of whether inflation continues to ease as the Federal Reserve debates its next interest rate decision.

The report, set for release at 8:30 a.m. ET on Thursday, is expected to show headline inflation of 2.3%, a deceleration from August's 2.5% annual gain in prices, which marked the lowest annual rate since early 2021. Over the prior month, consumer prices are expected to have risen 0.1%, down from the 0.2% increase seen in August.

On a "core" basis, which strips out the more volatile costs of food and gas, prices in September are expected to have risen 3.2% over last year, unchanged from August's increase. Economists expect monthly core price increases to slow slightly, estimating an uptick of 0.2% compared to August's 0.3% gain in prices, according to Bloomberg data.

Inflation, although moderating, has remained above the Federal Reserve's 2% target on an annual basis.

But the Federal Reserve has recently shifted its attention to the state of the labor market, which has been surprisingly resilient in the face of high interest rates.

The strong report altered expectations about the path forward for interest rates, with markets now pricing in a smaller 25 basis point cut in November rather than another jumbo 50 basis point cut.

Read more about what to expect here.

The latest minutes from the Federal Reserve's September meeting showed the support among Fed officials for a half percentage interest rate cut was "a little weaker" than initially understood, according to Capital Economics chief North America economist Paul Ashworth.

The minutes revealed that a "substantial majority" of officials supported the half a percentage point interest rate cut. But "some participants" supported a 25 basis point interest rate cut, indicating perhaps more than just governor Michelle Bowman, the decision's lone dissenter, would've supported a smaller cut.

Yardeni Research chief markets strategist Eric Wallerstein noted on X that given signs of a weakening labor market helped drive the Fed to cut by 50 basis points, and the September jobs report poured some cold water on that thesis, the case for no rate cut in November is building.

"Based on discussion of the labor market at the time, and data released since, it is likely the hawks have much more sway in November," Wallerstein wrote.

Fresh minutes from the Federal Reserve's September meeting released on Wednesday afternoon showed a "substantial majority" of officials supported the larger interest rate cut but more than just the one dissenter might've supported a smaller interest rate cut.

"Some participants observed that they would have preferred a 25 basis point reduction of the target range at this meeting, and a few others indicated that they could have supported such a decision," the minutes read.

The minutes come as markets have aggressively shifted pricing for future Fed rate cuts after a surprisingly strong September jobs report. Following the minutes, markets are pricing in a 24% chance the Fed doesn't cut rates at its November meeting, up from a 0% chance seen a week ago, per the CME FedWatch Tool.

After the surprisingly hot September jobs report tempered expectations for Federal Reserve interest rate cuts this year, the focus has shifted back to how inflation could also play into that calculus.

Outside of better-than-expected health in the labor market, the most recent jobs report also showed year-over-year wage growth continued to tick higher. Wages grew 4% year over year in September, marking the second straight month where the yearly increase came in higher than the month prior.

Given that wages are considered an important measure for gauging inflation pressures, the rise has caught the attention of Wall Street.

"The September employment report was much stronger than expected, with job growth blowing past expectations, the unemployment rate declining and wage growth accelerating," Oxford Economics lead economist Nancy Vanden Houten wrote in a note following the jobs report. "The report makes another 50bp rate cut unlikely."

Bank of America US and Canada equity strategist Ohsung Kwon wrote in a note to clients on Friday that the importance of Thursday's CPI report "has risen" following the hot September jobs report. According to options market pricing, traders are expecting the largest stock move off a CPI release since May.

"While stocks should be able to withstand a slight upside surprise in inflation given improving macro data, a sizeable surprise could bring uncertainty on the easing cycle and more volatility into the market," Kwon wrote.

The S&P 500 (^GSPC) has risen about 0.5% pacing for a fresh record close. Financials (XLF) are up more than 0.8% to lead the 11 sectors.

Meanwhile, Utilities (XLU) and Real Estate (XLRE), which had been ripping higher over the past month as investors grew more optimistic about interest rate cuts, continued to lag on Wednesday, extending losses from the day prior.

Both Utilities and Real Estate have struggled in the past few sessions as investors have priced in fewer rate cuts over the next year in reaction to a stronger-than-expected September jobs report last Friday.

Disneyland's (DIS) theme park prices just went up again.

In an announcement early Wednesday, the company revealed more changes at California's Disneyland, including immediate price hikes on certain tickets and passes. Florida's Walt Disney World resort was not impacted by the changes.

Ticket prices, excluding its lowest-priced option, increased an average of 6%. Peak season, single-day tickets now cost $206, up from the prior $194. Add-ons like the popular park hopper pass, which allows guests to visit multiple parks within a single-day period, would cost an additional $65 to $75, depending on the season.

The company did not raise the cost of its lowest-tier one-day pass, which will remain at $104. It has been at that same price for the last six years.

Annual passes were hit with more sizable increases, with its various Magic Key passes seeing increases between $100 to $125, depending on the pass.

Disney said its ticket model is designed so that the days in high demand are priced higher. Guests who want a more affordable option are encouraged to find deals on lower-demand days.

“We always provide a wide variety of ticket, dining and hotel options, and promotional offers throughout the year, to welcome as many families as possible," Jessica Good, spokesperson for Disneyland Resort, said in a statement to Yahoo Finance.

The company has faced criticism regarding the high pricing at its parks, which has contributed to a recent demand slowdown. In an attempt to encourage more visitors, Disney has unveiled discounted tickets for kids and lower hotel prices during off-peak times.

Read more here about what this could mean for the company's bottom line.

Oil came off its session lows on Wednesday as traders weighed factors impacting prices this week including the latest US inventory data, China's stimulus, and the ongoing Middle East conflict.

West Texas Intermediate (CL=F) fell as much as 2% before paring losses to trade near $73 per barrel while Brent (BZ=F), the international benchmark price, also slipped less than 1% to trade above $76.

The latest US government data showed crude inventory rose by 5.81 million barrels last week, less than the gain of 11 million projected by the American Petroleum Group, an industry organization.

Wednesday's decrease follows a slide of more than 4% in the prior session after China's stimulus plans appeared to disappoint investors, and traders assessed whether the conflict between Tel Aviv and Tehran would ultimately impact Iran's crude production.

"If Israel were to strike Iran targeting oil facilities crude is likely underpriced, however, a strategic strike against military operations or other areas with minimal damage, and crude will likely migrate towards the $70/bbl area," Dennis Kissler, BOK Financial's senior vice president of trading, wrote in a client note on Wednesday.

WW International (WW) stock has risen more than 2% today, extending its gains from Tuesday after the company announced it's adding a compounded GLP-1 prescription weight loss offering.

The stock is now up more than 80% over the past five days.

Dallas Fed president Lorie Logan said Wednesday she would support lowering rates more gradually as the central bank moves forward.

"A more gradual path back to a normal policy stance will likely be appropriate from here to best balance the risks to our dual-mandate goals," Logan said in a speech in Houston.

Read more here.

New developments in the US Justice Department's battle with Google (GOOG, GOOGL) sent shockwaves through the tech world on Wednesday.

Yahoo Finance's Alexis Keenan reports:

The US Justice Department said in a new court filing that it may recommend a break up of Google as an antidote to unhealthy competition in the search engine market, showing just how far Washington is willing to go to rein in Big Tech.

DOJ lawyers used a 32-page document to outline a framework of options for DC District Court Judge Amit Mehta to consider, including "behavioral and structural remedies that would prevent Google from using products such as Chrome, Play, and Android to advantage Google search."

Google, in a blog post, said that "DOJ’s radical and sweeping proposals risk hurting consumers, businesses, and developers."

Read more here.

US stocks stalled on Wednesday as the risk of a Google breakup prompted a pause for thought in the wait for more Federal Reserve clues to the chances of a "soft landing."

The Nasdaq Composite (^IXIC) and the S&P 500 (^GSPC) slipped just below the flat line, while the Dow Jones Industrial Average (^DJI) dropped just more than 0.1%.

Taiwan Semiconductor Manufacturing Co. (TSM) posted quarterly revenues of 759.7 billion New Taiwan dollars ($23.6 billion) on Wednesday, beating the NT$748.3 billion expected in Bloomberg consensus estimates.

The US-listed stock in the Taiwanese company, which makes chips for Nvidia (NVDA) and Apple (AAPL), edged up 0.7% in premarket trading.

Rival Samsung (005930.KS) fell nearly 2%.

TSMC's third quarter revenue is 40% higher than the prior year and nearly 13% higher than the prior quarter. The results counter fears of a slowdown in AI spending, as companies continue to buy hardware to power generative artificial intelligence tools. TSMC releases its full report on third quarter results on Oct. 17.

Looking ahead, Wall Street analysts expect TSMC to report full-year revenue of NT$2.8 trillion ($87.4 billion), a 30% increase from the prior year. Some 94% of analysts recommend buying the stock and expect its US-listing price to rise to $215 per share over the next 12 months. It closed Tuesday at $197.91 per share

Boeing (BA) shares were set to open lower on Wednesday after negotiations with its machinist union broke down and the aircraft maker withdrew its contract proposal.

Following a third round of bargaining talks, which included two days of negotiations this week, Boeing COO Stephanie Pope told employees in an email that "further negotiations do not make sense at this point and our offer has been withdrawn."

Members of the International Association of Machinists and Aerospace Workers (IAM) have been on strike since Sept. 13 after voting down a tentative labor contract.

The union said Boeing refused to propose any wage increases, vacation or sick leave accrual, and would not reinstate a benefit pension, among other issues.

The labor talks breakdown occurred on the same day that rating agency S&P placed Boeing on CreditWatch, increasing the probability of a credit downgrade should the strike continue into the end of the year.

Boeing shares were down more than 1% in premarket trading.