4:09 pm: Microsoft and Disney among blue-chips to tumble
The Dow closed Thursday down 432 points, 1.3%, at 33,696, the Nasdaq Composite dropped 215 points, 1.8%, to 11,856 and the S&P 500 fell 57 points, 1.4%, to 4,091. The small-cap tracking Russell 2000 lost 16 points, 0.8%, to 1,945.
The benchmarks took a steep dive in the afternoon. Among the laggards were Microsoft Corporation and The Walt Disney Company, shares of which fell 2.6% and 3.1%, respectively.
The market was already in the red after January’s producer price index (PPI) rose 0.7% on the month, surpassing the expected 0.4% increase, but things took a turn for the worse around 3 pm ET.
More earnings are also on the way this afternoon, including from DraftKings and DoorDash.
12.05pm: Stocks fall as January‘s wholesale prices rise more than expected
US stocks were lower in noon trading as January’s producer price index (PPI) rose 0.7% on the month, surpassing the expected 0.4% increase.
At midday, the Dow fell 195 points to 33,933, while the S&P 500 eased 24 points at 4,123 and the tech-heavy Nasdaq lost 73 points to 11,998.
“Both inflation readings this week point to the stickiness of inflation and that the fight isn’t over, especially when considering today’s PPI reading was the highest month-over-month increase since early summer,” Morgan Stanley head of model portfolio construction Mike Loewengart said.
Notable movers included shares of Shopify Inc, which slid 16% after the company said it expects its first-quarter revenue to be slightly below forecasts.
9.35am: US PPI rebounds in January
The trend of stronger-than-expected economic data has continued into Thursday, sending stocks lower at the open.
The US Producer Price Index (PPI) for January came in hot, rising 0.7% month-over-month, ahead of forecasts of 0.4% and up from -0.2% in December.
Initial unemployment claims for the week ending February 11 also underscored the continued strength of the labor market, falling unexpectedly to 194,000.
This was modestly below the 195,000 claims reported for the previous week, and far below the Street’s expectation of 200,000.
FOREX.com market analyst Fiona Cincotta said the data built on the theme of stronger-than-forecast data points this week, after US CPI and retail sales came in ahead of estimates, suggesting, far from cooling into a recession, the US economy is still pretty hot.
“Inflation concerns are once overtaking recession fears as the prime concern for the markets, which means hawkish Fed fears are back in the driving seat,” she said.
She noted that there were now growing worries that the Fed won’t be pausing rate hikes any time soon, let alone performing a dovish pivot.
“As we would expect, as hawkish Fed bets rise, stocks are heading lower, led by the tech-heavy Nasdaq. Meanwhile, the USD is pushing higher,” Cincotta said.
“Looking ahead, investors will focus on the Fed policymakers who are due to speak and could shed more light on the Fed’s future path for rate hikes.”
Just after the opening bell, the Dow Jones Industrial Average had shed 289 points or 0.9% at 33,839 points, the S&P 500 was down 48 points or 1.2% at 4,100 points, and the Nasdaq Composite had lost 165 points or 0.4% at 11,908 points.
On the other hand, Bitcoin had rallied to hit a new six-month high. It had added 7.5% at US$24,406.21 shortly after the market opened.
6.30am: PPI expected to ease
Wall Street is expected to open mostly lower as investors continue to digest news that reveals the US economy remains resilient, clearing the path for the Federal Reserve to continue hiking interest rates to rein in sticky inflation.
January's Producer Price Index (PPI), scheduled for release before the start of trade, will be just the latest data point for the Federal Reserve to consider.
Futures for the Dow Jones Industrial Average (DJIA) fell 0.1% in Thursday pre-market trading and those for the broader S&P 500 index also declined 0.1%, while contracts for the Nasdaq-100 were flat.
The main indices all closed higher on Wednesday after retail sales numbers for January came in hotter than expected, following on from inflation data on Tuesday that was also higher than anticipated.
The DJIA closed 0.1% up at 34,128, the Nasdaq Composite jumped 0.9% to 12,071 and the S&P 500 added 0.3% to 4,148. The small-cap-focused Russell 2000 improved by 1.1% to 1,960.
“Investors continue to digest a busy data docket this week, with today’s producer price inflation, housing data, weekly jobless claims and the Philly Fed manufacturing survey the latest data dump,” commented TickMill Group market analyst Patrick Munnelly.
“PPI inflation is pencilled to retreat to 5.4% in the annualised comparison, while initial jobless claims are expected to remain anchored at record low levels, suggesting continued tightness in the US labour market landscape.
“Housing starts are set to buck the positive data trend, they are expected to post another decline with the sector weighed by interest rate increases, while the Philly Fed is expected to post a marginal improvement in conditions, but ultimately remaining in contractionary territory. Investors will also eye comments from Fed officials Bullard & Mester set to speak on the US economic outlook later today,” Munnelly added.