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Wall Street indexes down
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Consumer spending rises, inflation heats up
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Benchmark 10-year yields edge higher
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Crude oil rises
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U.S. dollar surges, gold drops
(Updates prices, adds more background)
By Chibuike Oguh
NEW YORK, Feb 24 (Reuters) - Global equity markets fell
while U.S. Treasury yields rose on Friday following
stronger-than-expected economic data that stoked worries the
Federal Reserve will prolong its interest rate hiking cycle.
Commerce Department data showed that consumer spending,
which accounts for two-thirds of U.S. economy activity, rose by
1.8% in January, the largest increase in nearly two years and
exceeding analyst estimates, according to a Reuters poll.
Furthermore, the personal consumption expenditures (PCE)
price index, the Fed's preferred inflation measure, accelerated
by 0.6% last month, the biggest increase in six months, bringing
the index to 5.4% for the 12 months through January.
The strong data deepened a market selloff across most
equities, with the MSCI world equity index ,
which tracks shares in 50 countries, shedding 1.37%. European
stocks were down 1.04%.
"The fact we've got another data item that shows the economy
is not slowing enough to hopefully give the Fed confidence that
they're in front of the inflation problem - that's why the
market is down," said Robert Stimpson, portfolio manager at Oak
Associates Funds in Akron, Ohio.
On Wall Street all three major indexes were down, led by a
selloff of stocks in so-called cyclical sectors including
technology, communication services, consumer discretionary, and
even healthcare.
The Dow Jones Industrial Average fell 1.16% to
32,768.91, the S&P 500 lost 1.34% to 3,958.51 and the
Nasdaq Composite dropped 1.94% to 11,365.15.
U.S. Treasury yields jumped, with benchmark 10-year yields
hitting 3.9667% and two-year yields , which are highly
sensitive to Federal Reserve policy, rising as high as 4.8322%,
the most since Nov. 4.
"The risk to the market is that it was premature in its
anticipation of a Fed pivot. The Fed is going to continue
raising interest rates higher than people think and for longer
than people think," Stimpson added.
Oil prices edged higher in volatile trade, bolstered by the
prospect of lower Russian exports but pressured by rising
inventories in the United States and concerns over global
economic activity.
Brent crude futures were up 0.39% at $82.53 a
barrel, while West Texas Intermediate U.S. crude futures (WTI) gained 0.52% to $75.78 per barrel.
The U.S. dollar strengthened against other major currencies,
with the dollar index up 0.545% at a seven-week high and
the euro down 0.38% at $1.0555.
Gold prices dropped to their lowest levels in eight weeks,
pushed down by the stronger dollar and higher bond yields. Spot
gold dropped 0.6% to $1,812.45 an ounce, while U.S. gold
futures fell 0.5% to $1,818.10 an ounce.
(Reporting by Chibuike Oguh in New York; Editing by Jan Harvey,
Kirsten Donovan)
