What's Going On With AT&T Stock?

Shares of AT&T Inc (T) saw a 1.9% to $21.30 decline Wednesday morning, pressured by rising U.S. Treasury yields in the wake of the August Consumer Price Index (CPI) report, which showed an unexpected increase in core inflation.

Despite a drop in headline inflation, the rise in core prices raised concerns about the Federal Reserve's future interest rate policy, weighing heavily on companies with high debt loads like AT&T (T).

CPI Report Sparks Treasury Yield Surge: The U.S. annual headline inflation rate for August came in at 2.5%, lower than the 2.9% recorded in July and below the expected 2.6%. However, core inflation, which excludes volatile food and energy prices, rose 0.3% month-over-month, surpassing expectations and accelerating from July's 0.2% increase.

This led to a surge in the yield on the benchmark 10-year U.S. Treasury note, which jumped 8 basis points following the report.

Higher Treasury yields typically drive up borrowing costs for companies and create more attractive alternatives to stocks, particularly for dividend-focused companies like AT&T (T).

With AT&T (T) carrying a substantial debt load?roughly $137 billion as of 2023?the rise in yields signals a potential increase in the company’s interest expenses, putting pressure on its bottom line.

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Interest Rate Concerns Weigh on AT&T

The unexpected rise in core inflation has led investors to reassess their expectations for the Federal Reserve's future rate cuts. While the lower headline inflation number initially pointed to a possible easing of monetary policy, the persistent strength in core prices suggests the Fed may be forced to keep rates higher for longer than anticipated.

For AT&T (T), this could mean prolonged exposure to high borrowing costs. As a capital-intensive business with significant investments in 5G infrastructure and past acquisitions, the company is highly sensitive to interest rate fluctuations.

Higher rates not only increase the cost of servicing its debt but also make its stock less attractive relative to safer, yield-bearing assets like U.S. Treasuries.

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How To Buy T Stock

Besides going to a brokerage platform to purchase a share – or fractional share – of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.

For example, in AT&T’s case, it is in the Communication Services sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.

According to data from Benzinga Pro, T has a 52-week high of $21.86 and a 52-week low of $14.12.