by Johann M Cherian and Noel Randewich
(Reuters) – The New York Stock Exchange ended sharply lower on Thursday as unexpectedly strong inflation data and lower weekly jobless claims in the United States stoked fears that the Federal Reserve (Fed) continue to raise interest rates.
The Dow Jones index fell 1.26% to 33,696.39 points.
The broader S&P-500 lost 1.38% to 4,090.51 points.
The Nasdaq Composite fell 1.78% to 11,855.83 points.
A US Department of Labor report released today showed producer prices rose in January at their fastest pace in seven months, driven by a jump in energy prices.
Other data released at the same time indicate that jobless claims fell unexpectedly last week, a further sign of the resilience of the US labor market.
All the indicators published during the week highlight inflation that is still high and an American economy that remains relatively solid, while the Fed tightened its monetary policy at the start of the year, which was very aggressive last year in an attempt to to control inflation.
“With data like this, the Fed is going to keep raising rates, and none of us want that,” said Tim Ghriskey, strategist at Ingalls & Snyder in New York.
“Whispers are now brewing about the possibility of a 50 basis point hike at the next meeting” of the US central bank, he added.
Declining in 2022, the S&P-500 has rebounded since the start of the year, rising around 7%, on the back of reassuring corporate results and cautious hope that the Fed is approaching of the end of its rate hike campaign.
Financial markets expect the Fed to raise its benchmark rate above 5% by May and keep it above that threshold until the end of the year.
All major sectors of the S&P-500 ended in the red, while the selling trend increased at the end of the session, especially with Tesla.
The title of the electric manufacturer fell 5.7% following the announcement of the recall of 362,000 vehicles in the United States in order to correct the autonomous driving software.
Roku jumped 11% after saying it expected revenue to beat expectations in the current quarter. Cisco Systems rose 5.2% to a nine-month high after raising its full-year revenue forecast.
( Jean Terzian)
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