Wall Street Today | Indexes Face Third Month of Decline on the Eve of FOMC Decision

U.S. stocks rose Tuesday as investors prepared for the latest Federal Reserve interest rate decision and new monthly jobs numbers. but every index finished in the red for the month of October. That marks three months of decline. CME Group estimates a 97% chance that the Fed will keep rates where they are.

For a quick rundown of the challenges Federal Reserve policymakers will be sorting through when they meet this week, last week’s economic data fits the bill.

Start with gross domestic product. The Commerce Department on Thursday reported that the economy grew at a blistering 4.9% annual rate in the third quarter, marking the fastest pace since the fourth quarter of 2021. The last time it grew as quickly in the pre-pandemic period was in the third quarter of 2014.

But the GDP report also showed that inflation’s cooling trend continued, a point underscored by monthly consumer-price data that the Commerce Department released Friday. Overall consumer prices were up 3.4% in September versus a year earlier, while core prices, which exclude food and energy items in an attempt to capture inflation’s underlying trend better, were up 3.7%. That is still too hot for the Fed, aiming for 2%, but the September year-over-year increase in core prices was the smallest since May 2021.

Bloomberg reported that US consumer confidence dropped to a five-month low in October, weighed down by dimmer views of business conditions and concerns about high prices. The Conference Board’s index fell to 102.6 this month from an upwardly revised 104.3 in September, data out Tuesday showed. The median estimate in the Bloomberg survey of economists called for 100.5

The group’s gauge of current conditions dropped to 143.1, the lowest in nearly a year. A measure of expectations — which reflects consumers’ six-month outlook — eased to a five-month low. A gauge of expected inflation picked up.

“Consumers continued to be preoccupied with rising prices in general, and for grocery and gasoline prices in particular,” Dana Peterson, chief economist at the Conference Board, said in a statement. “Consumers also expressed concerns about the political situation and higher interest rates.”

US crude production jumped to a record high of 13.05 million barrels a day in August, the US Energy Information Administration said Tuesday in a monthly report.

The output surpassed a previous high set in November 2019 of 13 million barrels a day. Options Implied 'Convexity' on Oil futures shows the highest difference between options chatter and price change since February 2022.

US crude has been playing an increasingly vital role in global oil markets due OPEC+ leaders Saudi Arabia and Russia extending production cuts. The US has routinely shipped about 4 million barrels a day overseas to fill the gap from a tight physical market.