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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
(Updates with end of trading session)
By Johann M Cherian and Noel Randewich
Feb 16 (Reuters) - Wall Street ended sharply lower on
Thursday after unexpectedly strong inflation data and a drop in
weekly jobless claims added to fears that the U.S. 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 a 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.
According to preliminary data, the S&P 500 lost 57.33 points, or 1.38%, to end at 4,090.27 points, while the Nasdaq Composite lost 215.12 points, or 1.80%, to 11,855.48. The Dow Jones Industrial Average fell 432.02 points, or 1.27%, to 33,696.03. Tesla Inc slid 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 hit a nine-month high after the network gear maker raised its full-year earnings forecast.
Roku Inc soared after the video streaming company forecast first-quarter revenue above market estimates. Shopify Inc sank after the Canadian e-commerce company forecast slowing revenue growth for the current quarter despite price hikes and new product launches. (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)
