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Markets closed mostly lower on Thursday after Core CPI data came in above expectations, increasing the overall rate of inflation to just below the Fed’s target rate. This raised speculations regarding a possible rate hike in the near future and weighed on the markets. Meanwhile, Dow gained for the third successive session and registered its 38th record close on Thursday. The S&P 500 declined after the retail shares tanked. In a series of latest threat, North Korea threatened to raze both Japan and the United States with nuclear weapons after the U.N. issued fresh sanctions against the country.

The Dow Jones Industrial Average (DJIA) closed at 22,203.48, gaining 0.2%. The S&P 500 Index (INX) decreased 0.1% to close at 2,495.62. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,454.28, declining 0.1%. A total of 6 billion shares were traded on Thursday, higher than the last 20-session average of 5.8 billion shares. Advancing issues outnumbered decliners on the NYSE by 1.09-to-1 ratio.  On the Nasdaq, decliners outnumbered advancers by a 1.20-to-1 ratio.  The CBOE VIX increased 1.3% to close at 92.09.

Dow Hits Another Record, Broader Markets End Lower

The Dow gained 45.30 points on Thursday to register its 38th record close for 2017. Boeing (BA - Free Report) and United Technologies (UTX - Free Report) contributed to most of the gains for the blue-chip index, rising 1.4% and 2.6% respectively. Shares of Boeing gained after the company announced plans to expand production of its 787 Dreamliner jets to 14 units in a month by 2019. Boeing possesses a Zacks Rank#2 (Buy), whereas United Technologies possesses a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Meanwhile, the S&P 500 dropped almost 3 points to end lower after the consumer discretionary shares tanked. Of the 11 major sectors of the S&P 500, five ended in the red, with consumer discretionary shares leading the decliners. The Consumer Discretionary Select Sector SPDR ETF (XLY) was down 0.54%. Such losses were incurred due to a slump in the shares of retail stocks. Shares of Tiffany & Co. (TIF - Free Report) and Kroger Co. (KR - Free Report) declined 4.8% and 2.2% respectively, weighing heavily on the S&P 500.

An Uptick in Inflation Raises Expectations of a Rate Hike by Fed

The Core CPI surged 0.4% for the month of August as compared to the consensus estimate of 0.3% increase for the same period. High rents and surging gas prices increased the cost of living in the United States in August. Gasoline prices surged last month as an aftermath of Hurricane Harvey and the economists do not expect the prices to go down anytime soon.

Moreover, the shelter index –– an index for measuring the cost of shelter –– swelled 0.5% in August, posting its biggest monthly increase since 2005. Economists commented that such an increase was the result of surging housing costs in the United States. Moreover, the core index rose 0.2% for the same period, logging its highest increase in six months.

Such high increase in the cost of living bolstered the rate of inflation to 1.9%, up from 1.7%. This resulted in speculations regarding a possible rate hike by the Fed as the figures for inflation came in just below the desired 2%. Such speculations caused broad based losses for the market.

Meanwhile, the cost of medical care decreased in August. The cost of medical care gained a paltry 1.8% in the last 12 months, also marking its smallest gain since 1965. Economists believe such a low rate of growth can be owed to declining payouts to doctors. Moreover, the uncertainty about the future of Obamacare also contributed toward the retarding growth rate of medical care costs.

Fresh Threats Surface from North Korea

In the latest rhetoric, North Korea issued fresh threats to both Japan and the United States on Thursday in the wake of new sanctions by the UN on the Asian country. In a clear-cut statement, North Korea vowed to raze both Japan and United States with nuclear weapons. Geopolitical tensions between Pyongyang and Washington have escalated in the past after the Asian country tested a series of its nuclear missiles, one of them flying over Japan’s Hokkaido.

Trump Agrees With the Democrats Once Again

On Wednesday night, top leaders from the Democratic Party stated that they had reached an agreement with President Trump to protect the children of illegal immigrant in the United States. This comes in exchange of improved security at the border; however, it does not include funding for the physical wall along the U.S. - Mexico border. However, Trump tweeted on Thursday that no such deal had been reached with the Democrats.

Stocks That Made Headlines

Brown-Forman Boosts Investment in Cooperage, Cuts Jobs

Brown-Forman Corporation (BF.B - Free Report) has decided to invest $45 million in its cooperage located at MacLean Avenue in Louisville, KY, in order to manufacture high-quality barrels. (Read More)

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