Wall Street falls after inflation, jobless claims data

New York (Reuters): Wall Street opened lower on Thursday as hotter-than-expected September inflation data reinforced expectations of a 25-basis-point rate hike by the Federal Reserve at its upcoming meeting.

The closely watched Consumer Price Index rose 0.2% on a monthly basis and 2.4% on an annual basis, with both figures being slightly higher than estimated by economists Reuters polled.

The core figure, which excludes volatile food and energy prices, rose 3.3% year-over-year, versus an estimated 2.3%.

The Dow Jones Industrial Average (.DJI), opens new tab fell 75.96 points, or 0.18%, to 42,433.87, the S&P 500 (.SPX), opens new tab lost 15.88 points, or 0.27%, to 5,776.16 and the Nasdaq Composite (.IXIC), opens new tab lost 69.40 points, or 0.38%, to 18,222.22.

The Russell 2000 (.RUT), opens new tab, which tracks economically sensitive small-cap stocks, lost 1.09%.

Rate-sensitive sectors fell, with Real Estate (.SPLRCR), opens new tab losing 0.6%, while Information Technology (.SPLRCT), opens new tab dropped 0.5%.

After the inflation data was released, traders firmed bets on a 25-bps cut in November at 86.9%, with a 13.1% chance of no change at all, according to CME's FedWatch.

"The market's reacting because you're pricing out the possibility of big Fed rate cuts and the risk that the Fed isn't going to be as supportive to markets," said Cameron Dawson, chief investment officer at NewEdge Wealth.

However, weekly jobless claims also rose to 258,000 for the week ending Oct. 5, versus an estimate of 230,000.

Annual inflation in the US eases back, but by not as much as expected.

"The CPI data coming in hotter than expected, and at the same time (that) initial jobless claims really picked up, is certainly a confusing message for markets," Dawson said.

"Whether or not that means the Fed is going to be able to deliver the full extent of its expected interest-rate cuts is a good question."