Wall St slips after stronger-than-expected inflation data

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A man walks along Wall Street in New York September 18, 2008. REUTERS/Eric Thayer/File Photo

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  • CPI rose 7.5% in January, above estimates
  • Disney jumps on optimistic quarterly results
  • Indices down: Dow 0.2%, S&P 0.3%, Nasdaq 0.3%

Feb 10 (Reuters) – Shares in Megacap dragged U.S. equity indices lower on Thursday after warmer consumer price data raised fears the Federal Reserve may act aggressively to counter inflation, while Disney surged after posting upbeat quarterly results.

Megacap growth stocks such as Amazon.com Inc, Apple Inc (AAPL.O), Google owner Alphabet Inc (GOOGL.O) and Microsoft Corp (MSFT.O) fell between 0.4% and 1, 8%.

Big banks like Wells Fargo & Co, Bank of America Corp (BAC.N) and JPMorgan Chase & Co (JPM.N) which tend to do well in a higher interest rate environment, gained more than 1% each, the yield on the benchmark 10-year US Treasury note exceeded 2% for the first time in 2.5 years.

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Seven of the 11 major sectors of the S&P 500 fell, with technology stocks (.SPLRCT), which are particularly under pressure from higher yields, falling 0.9%.

Walt Disney Co jumped 4.3% after beating revenue and profit estimates on strong subscriber additions and attendance at U.S. theme parks. Read more

“Disney is a big reason today. It’s a large-cap stock and its positive numbers likely helped stabilize some of this morning’s selloff, as well as banking stocks reacting to the fact that interest rates higher interest, for the most part, is positive for them,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

“You get a few large sectors providing a small bulwark against the sell market.”

Data from the Labor Department showed consumer prices jumped 7.5% in January on an annual basis, beating economists’ estimates of 7.3%, leading to the largest annual increase in inflation in 40 years. Read more

Traders are now betting the Fed will start raising rates at its March meeting, with money markets indicating a 50% chance of a half-point hike next month, up from 30% before the data was released. .

The data induced volatility in the markets, with the S&P 500 (.SPX) and Nasdaq (.IXIC) indices each falling more than 1% in early trading before paring some of the early trading losses.

“I expect we will see a return to the volatility that prevailed for most of January following this report,” said Brian Price, head of investment management for Commonwealth Financial Network.

“Investors may want to buckle up as it could be difficult for risky assets until inflationary data starts to ease, and I expect that to happen as it goes. as we progress through the year.”

As of 12:12 p.m. ET, the Dow Jones Industrial Average (.DJI) was down 73.90 points, or 0.21%, at 35,694.16, the S&P 500 (.SPX) was down 15.37 points, or 0.34%, to 4,571.81, and the Nasdaq Composite (.IXIC) was down 42.34 points, or 0.29%, to 14,448.03.

Meanwhile, the fourth-quarter earnings season was in full swing, with 78.1% of the 342 S&P 500 companies reporting results beating analysts’ earnings estimates, according to Refinitiv data.

Barbie maker Mattel Inc (MAT.O) and cereal maker Kellogg Co (KN) gained 8.6% and 3.6%, respectively, after forecasting full-year profit to beat market expectations. Read more

Advancing issues outnumbered declining issues with a ratio of 1.11 to 1 on the NYSE and 1.57 to 1 on the Nasdaq.

The S&P index recorded 30 new 52-week highs and one new low, while the Nasdaq recorded 52 new highs and 56 new lows.

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Reporting by Bansari Mayur Kamdar, Shreyashi Sanyal and Devik Jain in Bengaluru and Stephen Culp in New York; Editing by Shounak Dasgupta and Maju Samuel

Our standards: The Thomson Reuters Trust Principles.

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