The S&P 500 fell on Thursday as data indicated persistent inflationary pressures and a strong labor market, adding to concerns about the path of the Federal Reserve’s interest rate hike.
The S&P fell 0.74%, the Dow Jones Industrial Average fell 0.60%, or 206 points, and the Nasdaq fell 0.90%.
The producer price index rose 0.7% in January, beating economists’ expectations for a 0.4% increase, which pushed the annual figure to 6.0% in January, beating expectations of 5.4%.
The largest monthly PPI increase since June came at the same time that jobless claims fell unexpectedly, pointing to a strong labor market and suggesting that the Fed still has more work to do to reduce demand.
“Data like this is why policymakers continue to reaffirm their intent to raise interest rates before pausing, then leaving rates in tightening territory for an extended period,” Jefferies said in a note.
After the data, St. Louis Federal Reserve Bank President James Bullard said that “the current labor market situation is unprecedented,” as demand continues to far outpace supply. The St. Louis Fed president added, however, that further rate hikes could help “stabilize the headwind of inflation through 2023.”
Bullard added that he would put the possibility of a 50 basis point rate hike at the next meeting of the Federal Reserve’s Open Market Committee, which is responsible for rate decision.
Growth sectors of the market including consumer and technology were the hardest hit.
Tesla Inc (NASDAQ:TSLA) gave up gains to trade less than 1% after the electric car maker recalled 362,000 electric vehicles equipped with “fully self-driving” software that could cause “unsafe behavior around intersections,” according to the National Safety Administration. on highways.
Tesla stock was rising before the data on positive news that the company had sold all Model Y cars offered in the US.
On the earnings front, Roku had an outstanding performance, with the stock up more than 17% after the company reported upbeat guidance and a smaller-than-expected loss in the fourth quarter.
“Once macro trends improve, (NASDAQ:ROKU) is poised to return to massive profitability as a platform,” Wade Bush said in a note, after raising the share price target to $80 from $75.
Twilio (NYSE:TWLO) was also a big winner, up 17%, after the telecom company delivered strong forward guidance and fourth-quarter revenue that beat Wall Street estimates.
Cisco Systems Inc (NASDAQ:CSCO) reported better-than-expected second-quarter results as improved supply and strong demand boosted performance. Its shares rose more than 4%.
“While we expect investors to focus on the dynamic between the backlog and order growth, we believe the company is well positioned because it is focused on higher growth,” Oppenheimer said, raising the company’s price target to $58.00 from $50.00.
In other news, Virgin Galactic (NYSE:SPCE) rose 4% after its suborbital VMS Eve spacecraft completed a test flight after more than 15 months of inactivity.
The US dollar index rose by 0.10%, reaching 103.940. After the frightening statements of the Fed.
The most important levels of the dollar index; Support: 102.686, 103.053, 103.279 – Resistance: 104.013, 104.239, 104.606
While gold futures contracts decreased profits to record $1,846 an ounce, and spot contracts recorded $1,837 an ounce.
the most important levels of gold; Support: 1812.21, 1823.66, 1830.74 – Resistance: 1853.64, 1860.72, 1872.17