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Wall Street closed sharply lower on Friday, bogged down by inflation numbers. Treasury yields rose on apprehension of the Fed delaying rate cuts. All of the major stock indexes ended in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) slid 145.13 points, or 0.4%, to close at 38,627.99. Twenty components of the 30-stock index ended in negative territory, while 10 ended in positive.
The tech-heavy Nasdaq Composite lost 130.52 points, or 0.8%, to close at 15,775.65.
The S&P 500 dropped 24.16 points, or 0.5%, to close at 5,005.57. Eight of the 11 broad sectors of the benchmark index closed in the red. The Communication Services Select Sector SPDR (XLC), the Real Estate Select Sector SPDR (XLRE) and the Technology Select Sector SPDR (XLK) declined 1.6%, 1% and 0.9%, respectively, while the Materials Select Sector SPDR (XLB) advanced 0.5%.
The fear-gauge CBOE Volatility Index (VIX) increased 5% to 14.71. A total of 11.2 billion shares were traded on Friday, lower than the last 20-session average of 11.7 billion. Decliners outnumbered advancers by a 1.7-to-1 ratio on the NYSE. On the Nasdaq, declining issues outnumbered advancing ones by a 1.6-to-1 ratio.
PPI for January Comes in Hotter Than Expected
Producer-side inflation in the United States increased more than expected in January, stoking fears that inflation was picking up after months of cooling. Per the Labor Department, the Producer Price Index for final demand (PPI) increased 0.3% in January against a consensus estimate of 0.1% for the period. This increase was the largest in five months. On a year-over-year basis, the index for final demand rose 0.9% for the 12 months ended January 2024. Core PPI rose 0.5% in January 2024, its largest advance since January 2023.
This report has followed on the heels of hotter-than-expected consumer inflation for January and prompted investors to readjust their expectations from the Fed. The month of January already saw possibilities of the first rate cut in March disappear. Now, market participants are not sure anymore that they would see the first cutback in June.
"It has not shaken my confidence we are going the right direction," San Francisco Fed president Mary Daly said on Friday when asked about the recent data. "It's about how quickly are we going to go there."
The inflation numbers throughout the week, as well as comments coming in from hawkish Fed officials, ensured that the benchmark 10-year treasury yield spiked above 4.3% on Friday. At one point, the 2-year yield breached 4.7%, the highest since December.
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly reported that building permits for January had decreased to 1,470,000. The number for December was revised down to 1,493,000 from the previously reported 1,495,000.
Housing starts for January had decreased to 1,331,000. The number for December was revised up to 1,562,000 from the previously reported 1,460,000.
Weekly Roundup
Last Friday, the three widely followed indexes snapped a five-week winning streak on hotter-than-expected inflation numbers. The Nasdaq Composite, the S&P 500 and the Dow Jones Industrial Average lost 1.3%, 0.4% and 0.1%, respectively.
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Stock Market News for Feb 20, 2024
Wall Street closed sharply lower on Friday, bogged down by inflation numbers. Treasury yields rose on apprehension of the Fed delaying rate cuts. All of the major stock indexes ended in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) slid 145.13 points, or 0.4%, to close at 38,627.99. Twenty components of the 30-stock index ended in negative territory, while 10 ended in positive.
The tech-heavy Nasdaq Composite lost 130.52 points, or 0.8%, to close at 15,775.65.
The S&P 500 dropped 24.16 points, or 0.5%, to close at 5,005.57. Eight of the 11 broad sectors of the benchmark index closed in the red. The Communication Services Select Sector SPDR (XLC), the Real Estate Select Sector SPDR (XLRE) and the Technology Select Sector SPDR (XLK) declined 1.6%, 1% and 0.9%, respectively, while the Materials Select Sector SPDR (XLB) advanced 0.5%.
The fear-gauge CBOE Volatility Index (VIX) increased 5% to 14.71. A total of 11.2 billion shares were traded on Friday, lower than the last 20-session average of 11.7 billion. Decliners outnumbered advancers by a 1.7-to-1 ratio on the NYSE. On the Nasdaq, declining issues outnumbered advancing ones by a 1.6-to-1 ratio.
PPI for January Comes in Hotter Than Expected
Producer-side inflation in the United States increased more than expected in January, stoking fears that inflation was picking up after months of cooling. Per the Labor Department, the Producer Price Index for final demand (PPI) increased 0.3% in January against a consensus estimate of 0.1% for the period. This increase was the largest in five months. On a year-over-year basis, the index for final demand rose 0.9% for the 12 months ended January 2024. Core PPI rose 0.5% in January 2024, its largest advance since January 2023.
This report has followed on the heels of hotter-than-expected consumer inflation for January and prompted investors to readjust their expectations from the Fed. The month of January already saw possibilities of the first rate cut in March disappear. Now, market participants are not sure anymore that they would see the first cutback in June.
"It has not shaken my confidence we are going the right direction," San Francisco Fed president Mary Daly said on Friday when asked about the recent data. "It's about how quickly are we going to go there."
The inflation numbers throughout the week, as well as comments coming in from hawkish Fed officials, ensured that the benchmark 10-year treasury yield spiked above 4.3% on Friday. At one point, the 2-year yield breached 4.7%, the highest since December.
Consequently, shares of Airbnb, Inc. (ABNB - Free Report) and Meta Platforms, Inc. (META - Free Report) slid 3.3% and 2.2%, respectively. Meta Platforms currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Economic Data
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly reported that building permits for January had decreased to 1,470,000. The number for December was revised down to 1,493,000 from the previously reported 1,495,000.
Housing starts for January had decreased to 1,331,000. The number for December was revised up to 1,562,000 from the previously reported 1,460,000.
Weekly Roundup
Last Friday, the three widely followed indexes snapped a five-week winning streak on hotter-than-expected inflation numbers. The Nasdaq Composite, the S&P 500 and the Dow Jones Industrial Average lost 1.3%, 0.4% and 0.1%, respectively.