Another hotter-than-expected update on inflation is keeping U.S. stocks in check on Friday. The S&P 500 was down 0.1% in early trading after setting an all-time high the day before. The Dow Jones Industrial Average was 164 points lower, or 0.4%, and the Nasdaq composite was virtually unchanged.
Quick Read
- Inflation concerns impact US stocks; S&P 500 dips slightly, Dow falls, and Nasdaq remains stable after recent highs.
- Wholesale inflation in January exceeded expectations, continuing the trend of rising prices and challenging hopes for an end to inflation.
- The report follows consumer cost increases surpassing forecasts, influencing Treasury yields and market expectations for Federal Reserve rate cuts.
- Treasury yields spiked, with the 10-year rate reaching 4.31%, indicating higher borrowing costs and potential economic slowdown.
- Market expectations are now more aligned with the Federal Reserve’s stance, anticipating rate cuts as the next move but not as soon or as significantly as previously thought.
- Positive earnings reports boost stocks like Applied Materials and Coinbase Global, while Digital Realty faces a decline after disappointing results.
- Global markets show gains, with Japan’s Nikkei 225 nearing its historic high, reflecting optimism despite Japan’s economic size reduction.
The Associated Press has the story:
Another inflation update keeps Wall Street in check after it set records
Newslooks- NEW YORK (AP) —
Another hotter-than-expected update on inflation is keeping U.S. stocks in check on Friday. The S&P 500 was down 0.1% in early trading after setting an all-time high the day before. The Dow Jones Industrial Average was 164 points lower, or 0.4%, and the Nasdaq composite was virtually unchanged.
Friday’s report on inflation at the wholesale level was the latest reminder that the battle against rising prices still isn’t over. Prices rose more in January than economists expected, and the numbers followed a similar report from earlier in the week that showed living costs for U.S. consumers climbed by more than forecast.
Treasury yields leaped in the bond market immediately after the report’s release. The data kept the door closed on hopes that the Federal Reserve could begin cutting interest rates in March, as traders had earlier hoped. It also discouraged bets that a Fed move to relax conditions on the economy and financial markets could come even in May.
The yield on the 10-year Treasury jumped to 4.31% from 4.24% late Thursday, and it earlier neared its highest level since November. Higher rates and yields make borrowing more expensive, which tighten the brakes on the economy and hurt prices for investments.
Still, the recalibrated bets for cuts to rates have simply brought Wall Street’s forecasts closer to what the Federal Reserve has been outlining. Critics have been saying traders’ expectations had gone overboard in how quickly and how much the Fed could cut rates in 2024. The expectation is still for the Fed’s next move to be to cut its main interest rate, which is at its highest level since 2001, as it’s said it likely will.
In the meantime, the hope is that a solid economy will allow companies to deliver growth in profits.
Applied Materials jumped 9.6% after it reported stronger profit for the latest quarter than analysts expected. The company designs and manufactures systems used to fabricate semiconductor chips, and it’s benefiting from the frenzy underway for artificial-intelligence technology.
Cryptocurrency company Coinbase Global leaped 16.5% after it reported much better results than forecast. Higher crypto prices helped drive more transaction revenue for the company.
On the losing end was Digital Realty, which sank 6.2%. The owner of data centers reported weaker results than expected.
In stock markets abroad, indexes climbed across much of Europe and Asia.
In Japan, Tokyo’s Nikkei 225 rose 0.9% and got close to its record high set at the end of 1989. That was just before Japan’s “bubble” economy burst as stock and real-estate prices plunged.
Japanese stocks have been rising even though its economy has shrunk to become the world’s fourth-largest.
