Stocks fell on Thursday, with the S&P 500 and Dow Jones Industrial Average retreating from record highs. The S&P 500 lost 0.4%, the Dow declined by 179 points (0.4%), and the Nasdaq dipped 0.3%. Wall Street reacted to September’s Consumer Price Index (CPI) report, which showed a 0.2% monthly increase, pushing the annual inflation rate to 2.4%, slightly above the 2.3% expected by analysts. This marks the lowest year-over-year inflation rate since February 2021.

The CPI data sparked renewed concerns that the Federal Reserve may slow the pace of future rate cuts. Atlanta Fed President Raphael Bostic mentioned he would support a pause in November’s rate meeting, despite market expectations for another 25 basis point reduction. Traders are now pricing in an 80% chance of a quarter-point cut in November, according to CME Group’s FedWatch tool.

Minutes from the Fed’s latest meeting also revealed some division among officials, with a substantial majority supporting a rate cut, though some favored a smaller reduction. Economists now see the Fed facing the challenge of reducing inflation while avoiding a recession. Bond traders are betting that the central bank will lower rates by 25 basis points at the next meeting in November.