US stocks extend inflation-induced decline as investors mull Fed's next policy move

• US stocks closed lower on Thursday, extending their inflation-induced decline that kicked off with Tuesday's plunge.
• Investors are now keenly focused on what the Fed will do with interest rates at next week's meeting of the FOMC.
• Jobless claims fell for a fifth straight week to 213,000, below economist estimates for 227,000.

US stocks closed lower on Thursday, extending their inflation-induced decline that started with Tuesday's drop of over 4% in the S&P 500.

A hotter-than-expected August CPI inflation report has now shifted investor focus towards what the Federal Reserve will do with interest rates at next weeks Federal Open Market Committee meeting. Most investors currently expect another outsized 75 basis point interest rate hike, but some think the Fed should raise rates by a full 100 basis points to tame inflation.

Stocks were briefly higher in early Thursday trades after weekly jobless claims fell for a fifth straight week last week to 213,000. That's below economist estimates for 227,000 in jobless claims, and it's a sign that the labor market remains strong as businesses look to fill empty positions.

Here's where US indexes stood at the 4:00 p.m. ET close on Thursday:

• S&P 500: 3,901.35, down 1.13%
• Dow Jones Industrial Average: 30,961.82, down 0.56% (173.27 points)
• Nasdaq Composite: 11,552.36, down 1.43%

Here's what else is happening today:

• Railroad stocks surged after unions struck a deal to avert a strike, with CSX, Norfolk Southern, and Union Pacific all gaining about 3%.
• Apple has unseated Tesla as the most-shorted US stock - after Elon Musk's EV company held the title for 864 days, according to data from S3 Partners.
• The founder of Patagonia is giving away his billion dollar company and ensuring that all profits go towards fighting climate change.
• The Ethereum blockchain completed its Merge upgrade early Thursday, cofounder Vitalik Buterin said. Ether fell as much as 9% as the merge was viewed as a "sell the news" event.
• Billionaire investor Ray Dalio predicts the Fed will hike interest rates to at least 4.5% - and warns a major recession is likely, coupled with a 20% sell-off in the stock market.

In commodities:

• West Texas Intermediate crude oil fell 3.57% to $85.32 per barrel. Brent crude, oil's international benchmark, dropped 3.29% to $91.00.
• Gold fell 2.14% to $1,672.50 per ounce. The yield on the 10-year Treasury rose 5 basis points to 3.46%.
• Bitcoin fell 1.14% to $19,796. Ether fell 6.50% to $1,502.