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Jan producer prices up 0.7% vs est. of 0.4% rise
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Cisco hits nine-month high after raising forecast
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Roku soars as revenue forecast beats estimate
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Indexes: S&P 500 -0.39%, Nasdaq -0.48%, Dow -0.37%
(Updates with details of afternoon trading, adds investor
comment)
By Johann M Cherian and Noel Randewich
Feb 16 (Reuters) - Wall Street fell on Thursday after
unexpectedly strong inflation data and a drop in weekly jobless
claims added to fears that the Federal Reserve will keep raising
interest rates to tame high prices.
A Labor Department report showed the highest rise in
producer prices in seven months in January as the cost of energy
products surged.
It also showed the number of Americans filing new claims for
unemployment benefits unexpectedly fell last week, offering more
evidence that the labor market remains tight.
Thursday's economic data and other reports this week paint a
picture of still-stubborn inflation and an economy that remains
relatively strong in the face of the Fed's rate hike campaign.
"With data like this, the Fed is going to keep raising
rates, and none of us want that," said Tim Ghriskey, senior
portfolio strategist at Ingalls & Snyder in New York. "There are
at least whispers now of the possibility of a 50 basis point
hike at the next meeting."
After selloff in 2022, the S&P 500 has climbed almost 8% so far in 2023, fueled by upbeat earnings and cautious expectations the U.S. central bank has completed the brunt of its rate hike campaign. The Fed is seen pushing the benchmark rate above the 5% mark by May and keeping it above those levels till the year-end. Also on Thursday, Cleveland Fed President Loretta Mester said inflation remains too high, and noted that she was open to raising rates by more than what her colleagues wanted at the last monetary policy meeting. St. Louis Fed President James Bullard said continued rate increases will "lock in" slowing inflation, even with continued economic growth.
All 11 S&P 500 sector indexes declined, led lower by consumer discretionary , down 0.51%, followed by a 0.5% loss in information technology . In afternoon trading, the S&P 500 was down 0.39% at 4,131.36 points. The Nasdaq declined 0.48% to 12,012.22 points, while the Dow Jones Industrial Average was down 0.37% at 34,003.35 points. Tesla Inc slid 0.6% as the electric vehicle maker said it was recalling 362,000 U.S. vehicles and fixing them via an over-the-air software update after the U.S. auto regulator said its Full Self-Driving Beta software may cause a crash. Cisco Systems Inc rose 6.2% to hit a nine-month high after the network gear maker raised its full-year earnings forecast.
Roku Inc soared almost 18% after the video streaming company forecast first-quarter revenue above market estimates. Shopify Inc sank more than 15% after the Canadian e-commerce company forecast slowing revenue growth for the current quarter despite price hikes and new product launches. Across the U.S. stock market , declining stocks outnumbered rising ones by a 1.4-to-one ratio. The S&P 500 posted 7 new highs and 1 new lows; the Nasdaq recorded 70 new highs and 39 new lows. (Reporting by Johann M Cherian and Sruthi Shankar in Bengaluru and by Noel Randewich in Oakland, Calif.; Editing by Anil D'Silva, Sriraj Kalluvila, Shinjini Ganguli and Aurora Ellis)
