- Jan Producer prices up 0.7% vs 0.4% increase
- Cisco hits nine-month high after raising forecast
- Roku rises as revenue forecast beats estimate
- Indices: S&P 500 -1.38%, Nasdaq -1.78%, Dow -1.26%
February 16 (Portal) – Wall Street ended sharply lower on Thursday after stronger-than-expected inflation data and a drop in weekly jobless claims added to fears that the US Federal Reserve will hike further interest rates to tame soaring prices.
A Labor Department report in January showed the highest rise in producer prices in seven months as the cost of energy products soared.
It also showed that the number of Americans filing new jobless claims fell unexpectedly last week, further evidence the job market remains tight.
Thursday’s economic data and other reports this week paint a picture of still stubborn inflation and an economy that remains relatively strong amid the Fed’s rate hike campaign.
“With data like this, the Fed is going to keep raising rates, and none of us want that,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. “There are at least rumors now about the possibility of a 50 basis point hike at the next meeting.”
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After a sell-off in 2022, the S&P 500 is up about 7% so far in 2023, buoyed by upbeat earnings and cautious expectations that the Federal Reserve has completed the brunt of its rate-hiking campaign.
The Fed will push interest rates above the 5% mark by May and keep them above this level until the end of the year.
Also on Thursday, Cleveland Fed Chairwoman Loretta Mester said inflation was too high, noting that she was willing to raise rates more than her peers wanted at the last monetary policy meeting. St. Louis Fed President James Bullard said continued rate hikes would slow inflation even as economic growth continued.
Selling on Wall Street accelerated late in the session. The S&P 500 fell 1.38% to close at 4,090.51 points.
The Nasdaq fell 1.78% to 11,855.83 points, while the Dow Jones Industrial Average fell 1.26% to 33,696.39 points.
Tesla Inc (TSLA.O) slipped 5.7% as the electric vehicle maker said it is recalling 362,000 U.S. vehicles and fixing them via an over-the-air software update, after the U.S. auto regulator said that its Full Self-Driving Beta software could cause a crash.
Dealers swapped $47 billion worth of Tesla shares, accounting for one-fifth of all S&P 500 stock transactions.
Cisco Systems Inc (CSCO.O) rose 5.2% to hit a nine-month high after the networking equipment maker raised its full-year earnings forecast.
Roku Inc (ROKU.O) rose 11% after the video streaming company forecast first-quarter revenue that beat market estimates.
Shopify Inc sank nearly 16% after the Canadian e-commerce company forecast slowing sales growth for the current quarter despite price hikes and product launches.
In the US stock market (.AD.US), falling stocks outweighed rising ones by a ratio of 2.5:1.
The S&P 500 posted 9 new highs and 1 new low; The Nasdaq recorded 90 new highs and 58 new lows.
Volume on US exchanges was relatively light at 11.0 billion shares traded, compared to an average of 11.7 billion shares over the previous 20 sessions.
Reporting by Johann M. Cherian and Sruthi Shankar in Bengaluru and by Noel Randewich in Oakland, California; Edited by Anil D’Silva, Sriraj Kalluvila, Shinjini Ganguli and Aurora Ellis
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