Hotter-Than-Expected Inflation Data Contributing To Sell-Off On Wall Street

Stocks have moved sharply lower in morning trading on Friday, more than offsetting the upward move seen over the course of the previous session. With the steep drop on the day, Dow has tumbled to a two-month intraday low.

Currently, the major averages are lingering near their worst levels of the day. The Dow is down 488.57 points or 1.5 percent at 32,665.34, the Nasdaq is down 238.82 points or 2.1 percent at 11,351.58 and the S&P 500 is down 65.69 points or 1.6 percent at 3,946.63.

The sell-off on Wall Street comes following the release of a report from the Commerce Department showing an unexpected acceleration in the annual rate of growth by core consumer prices in the month of January.

The report said annual growth by core consumer prices, which exclude food and energy prices, accelerated to 4.7 percent in January from an upwardly revised 4.6 percent in December.

Economists had expected the annual rate of growth by core consumer prices to slow to 4.3 percent from the 4.4 percent originally reported for the previous month.

Including food and energy prices, consumer price growth also accelerated to 5.4 percent in January from 5.3 percent in December. The rate of growth was expected to slow to 4.9 percent.

The unexpected acceleration in core consumer price growth has added to recent concerns about the outlook for interest rates.

Paul Ashworth, Chief North America Economist at Capital Economics, called the data “another sign that the Fed might have to leave its policy rate higher for longer.”

Meanwhile, traders have largely shrugged off separate reports showing a surge in new home sales and a slightly bigger than previously estimated improvement in consumer sentiment.

Steel stocks are seeing substantial weakness on concerns about the outlook for demand, dragging the NYSE Arca Steel Index down by 3.1 percent to its lowest intraday level in over a month.

Significant weakness is also visible among networking stocks, as reflected by the 2.4 percent slump by the NYSE Arca Networking Index.

Software stocks are also seeing considerable weakness on the day, with the Dow Jones U.S. Software Index tumbled by 2.3 percent.

Adobe (ADBE) is posting a steep loss after a report from Bloomberg said the Justice Department is preparing an antitrust lawsuit seeking to block the company’s $20 billion acquisition of startup Figma.

Semiconductor, computer hardware and airline stocks have also shown notable moves to the downside, moving lower along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance on Friday. Japan’s Nikkei 225 Index jumped 1.3 percent following the holiday on Thursday, while Hong Kong’s Hang Seng Index tumbled by 1.7 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the U.K.’s FTSE 100 Index is down by 0.4 percent, the French CAC 40 Index and the German DAX Index are down by 1.5 percent and 1.6 percent, respectively.

In the bond market, treasuries are giving back ground after moving higher over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6 basis points at 3.939 percent.

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