Wall Street closes mixed as inflation data eases rate fears but long-term yields hit 24-year high

US inflation came in below market expectations, easing concerns about further Federal Reserve rate hikes, but a surge in long-term Treasury yields to their highest level in more than 24 years left Wall Street's three major indexes closing in mixed territory.

The Dow Jones Industrial Average fell 443.87 points, or 0.86 percent, to close at 50,906.05 on the New York Stock Exchange. The S&P 500 dropped 19.30 points, or 0.25 percent, to finish at 7,651.54. The tech-heavy NASDAQ Composite bucked the trend, gaining 63.52 points, or 0.24 percent, to end at 26,861.06.

Stocks opened higher after the August personal consumption expenditures price index came in below forecasts, but gave back most of those gains as long-term Treasury yields climbed and strong economic data weighed on sentiment.

According to the Commerce Department, the August PCE price index — the Fed's preferred inflation gauge — rose 3.4 percent from a year earlier, falling short of the market consensus of 3.7 percent.

Core PCE, which strips out food and energy to reflect underlying inflation trends, also came in below expectations, leading analysts to conclude that the Fed is less likely to raise its benchmark interest rate at the October FOMC meeting.

Interest rate futures markets priced in roughly a 37 percent chance of an October rate hike — down sharply from more than 70 percent just a week earlier.

However, rising long-term yields continued to weigh on equities. The 10-year Treasury yield broke above 5.3 percent during trading, its highest level since May 2002. The 30-year yield also topped 5.6 percent, reaching its highest point since June 2002.

Markets acknowledged that the softer inflation reading reinforced expectations for a Fed pause, but analysts noted that tightening concerns had not fully dissipated given the economy's continued strength and resilient labor market conditions.

A final reading on second-quarter GDP growth, also released that day, showed the economy expanded at an annualized rate of 2.2 percent — up 0.7 percentage point from the earlier preliminary estimate of 1.5 percent.

The ADP National Employment Report, released the same day, showed private-sector payrolls grew by 90,000 in September, topping market forecasts.

Oil prices rose as negotiations between the United States and Iran remained deadlocked. November-delivery Brent crude settled up $0.94, or 0.92 percent, at $103.53 a barrel, while November-delivery West Texas Intermediate gained $1.04, or 1.16 percent, to close at $90.42 a barrel.