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WALL Street’s main indexes ticked lower on Friday after a hotter-than-expected producer prices report pushed back market speculations of imminent interest rate cuts by the U.S. Federal Reserve.
A Labor Department report showed U.S. producer prices increased more than expected in January amid strong gains in the costs of services, which could amplify worries that inflation was picking up.
Treasury yields spiked after the report, with the yield on the benchmark 10-year note last at 4.306%, as traders added to bets that the Fed may defer the first rate cut until after June.
The PPI data follows a selloff in equity markets earlier this week that was driven by a hotter-than-expected consumer prices report, though a slump in January retail sales provided some relief on Thursday.
“We continue to believe inflation is moderating. Data doesn’t move in a straight line, there will be bumps in the road,” said Brian Klimke, chief market strategist at Cetera Investment Management.
“But if we continue to get this hot inflation data it could delay things (rate cuts) maybe to June. As of now, June is looking more and more likely.”
Most megacap stocks gave up early gains, with Meta Platforms falling 2.0% and dragging the S&P 500 communication services index down 1.1%.
Nvidia bucked the trend, up 0.9%, after Oppenheimer hiked its price target on the chip designer’s stock.
Applied Materials jumped 7.3% to a record high after the semiconductor equipment supplier forecast better-than-expected second-quarter revenue on strong demand for advanced chips used in AI.
The tech-heavy Nasdaq is set to snap a five-week winning streak, while the benchmark S&P 500 also lost some steam this week after jumping more than 5% so far this year.
Robust corporate earnings and a surge in enthusiasm around the potential for artificial intelligence has helped the S&P 500 close above the 5,000-point mark for the fourth time this year.
Later in the day, focus will be on remarks by Fed’s policymakers including San Francisco chief Mary Daly, a voting member this year.
Atlanta Fed President Raphael Bostic on Thursday noted he saw fewer rate cuts in his last forecasts compared with his colleagues in part because he has been expecting less steady progress on inflation.
At 9:50 a.m. ET, the Dow Jones Industrial Average was down 110.10 points, or 0.28%, at 38,663.02, the S&P 500 was down 13.20 points, or 0.26%, at 5,016.53, and the Nasdaq Composite was down 58.39 points, or 0.37%, at 15,847.79.
Roku slumped 19.4% after forecasting a bigger first-quarter loss, while crypto exchange Coinbase Global jumped 12.7% on posting its first quarterly profit since 2021.
DoorDash dropped 12.9% as the delivery firm forecast a quarterly profitability metric below expectations, hurt by higher labor costs.
Declining issues outnumbered advancers for a 2.89-to-1 ratio on the NYSE and a 2.06-to-1 ratio on the Nasdaq.
The S&P index recorded 30 new 52-week highs and three new lows, while the Nasdaq recorded 47 new highs and 25 new lows. – Reuters
