US Stocks Close Mixed Amid Softer Inflation and Rising Treasury Yields

US stocks closed mixed on Wednesday, the final trading day of September, as rising Treasury yields weighed on sentiment despite softer-than-expected inflation data.

The Dow Jones Industrial Average fell 443.87 points, or 0.86%, to 50,906.05, while the S&P 500 declined 19.30 points, or 0.25%, to 7,651.54. The Nasdaq composite gained 63.52 points, or 0.24%, to 26,861.06.

Investors assessed the Federal Reserve's preferred inflation measure, the personal consumption expenditures price index, which increased 3.4% year-on-year in August, below market expectations of 3.7%. Core inflation, which excludes food and energy, stood at 3%, also below expectations.

The stronger-than-expected employment data accompanied the inflation release, with private employers adding 90,000 jobs in September, exceeding expectations of 68,000. This rebound in job creation was seen as a positive sign by ADP chief economist Nela Richardson, who noted that 'after a three-month slowdown, job creation rebounded and pay growth remained solid.'

Traders reduced bets on an October interest rate increase following the inflation figures, with the probability of a quarter-point hike falling to around 35%, from 51% a day earlier. This shift in expectations was reflected in the yield on the benchmark 10-year US Treasury, which rose about 4.3 basis points to a 24-year high of 5.306%.

The mixed performance of US stocks was mirrored in European markets, with all major indices closing lower. The Stoxx Europe 600 index fell 0.5%, while the FTSE 100 declined 0.29%, and Germany's DAX 40 dropped 0.79% to 25,199.19.