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U.S. CPI slightly above expectations

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Jobless claims climb, boosted by Helene

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Market views for 25-bp Fed rate cut in November climb

(Updated at 10:35 a.m. ET/1435 GMT)

By Chuck Mikolajczak

NEW YORK, Oct 10 (Reuters) -

Global stocks slipped for the first time in three sessions

while shorter-dated U.S. Treasury yields dipped as slightly

higher than expected U.S. inflation data and a jump in weekly

jobless claims did not diminish expectations the Fed will cut

rates in November.

U.S.

consumer prices rose

(CPI) slightly more than expected in September amid higher

food costs, but the annual increase in inflation was the

smallest in more than 3-1/2 years. The Labor Department said the

consumer price index increased 0.2% last month after gaining

0.2% in August, slightly above expectations of economists polled

by Reuters for a 0.1% rise.

In the 12 months through September, the CPI rose 2.4%

versus the 2.3% estimate.

Other data showed weekly initial

jobless claims jumped

33,000 last week to a seasonally adjusted 258,000, well

above the 230,000 estimate, although the climb was partially

attributed to distortions from Hurricane Helene.

The data helped solidify expectations the Federal

Reserve with cut interest rates next month, with CME's

FedWatch Tool

showing markets pricing in an 87.1% chance for a cut of 25

basis points (bps), up from 80.3% in the prior session.

The market had been pricing in a 32.1% chance for

another outsized cut of 50 bps a week ago.

"Inflation was a little hotter than expected in

September. Inflation expectations move in tandem with energy

prices, so the Fed will have to start giving equal airtime to

worries about inflation moving higher and the economy slowing.

Goods price deflation won't be enough to counterbalance higher

energy and food prices," said Brian Jacobsen, chief economist at

Annex Wealth Management in Menomonee Falls, Wisconsin.

"The market swung from thinking the Fed was too timid in

its rate cut projections to being a bit ambitious."

The Dow Jones Industrial Average fell 84.06

points, or 0.20%, to 42,427.45; the S&P 500 fell 15.15

points, or 0.26%, to 5,777.02 and the Nasdaq Composite

fell 60.79 points, or 0.33%, to 18,230.82. Both the Dow and S&P

500 closed at record highs on Wednesday.

MSCI's gauge of stocks across the globe

fell 1.02 points, or 0.12%, to 847.62, on track to snap

back-to-back sessions of gains. In Europe, the STOXX 600

index fell 0.21%.

Markets have been dialing back expectations the Fed will be

aggressive in cutting interest rates after Friday's strong U.S.

payrolls report. Comments from Fed Chair Jerome Powell and other

central bank officials have signaled the Fed has shifted its

primary focus from combating inflation to labor market

stability.

Chicago Federal Reserve Bank Austan Goolsbee said after

the CPI data that he sees a series of interest-rate cuts over

the next year to year and a half, noting that inflation is now

near the Fed's 2% goal and the economy is about at full

employment, and the Fed's goal is to freeze those conditions in

place.

The yield on benchmark U.S. 10-year notes

rose 2.9 basis points to 4.096% while the 2-year note

yield, which typically moves in step with interest rate

expectations, fell 2.6 basis points to 3.991%.

The dollar index, which measures the greenback

against a basket of currencies, rose 0.13% to 103.01, with the

euro down 0.21% at $1.0916.

Against the Japanese yen, the dollar weakened 0.42%

to 148.66. Bank of Japan Deputy Governor Ryozo Himino said on

Thursday the central bank will consider raising interest rates

if the board has "greater confidence" that its economic and

price forecasts will be realized.

Sterling weakened 0.28% to $1.3032.

Oil prices advanced after two sessions of decline, boosted

by a spike in fuel demand as Hurricane Milton barreled into

Florida, with Middle East supply risks also in focus.

U.S. crude rose 2.13% to $74.80 a barrel and Brent

rose to $78.27 per barrel, up 2.21% on the day.