Traders work on the floor of the New York Stock Exchange during morning trading on February 14, 2024 in New York City.Â
Michael M. Santiago | Getty Images
Stocks declined Friday after yet another hot inflation report stoked fears that Federal Reserve rate cuts may not arrive until later than anticipated this year.
The S&P 500 fell 0.1%, while the Dow Jones Industrial Average dipped 60 points, or 0.2%. The Nasdaq Composite slid 0.2%.
The producer price index for January, a measure of wholesale inflation, increased 0.3%. Economists polled by Dow Jones had anticipated a gain of 0.1%. Excluding food and energy, core PPI rose increased 0.5%, higher than the expectations for a 0.1% advance.
The 10-year Treasury yield jumped above 4.3% following the hot PPI reading. The 2-year Treasury yield topped 4.7%, the highest since December.
It’s been a roller coaster week for stocks, with investors carefully assessing the direction of the U.S. economy and when the Federal Reserve may decide to lower rates. On Tuesday, the Dow posted its biggest daily decline in nearly a year after January’s headline consumer price index reading came in at 3.1%, higher than the 2.9% economists polled by Dow Jones were expecting.
The market shook off the report the next two days, with the S&P 500 rebounding on Thursday to close at yet another record high. But Friday’s wholesale inflation report added to concerns the Fed may have to wait until later in the year before it starts cutting rates.
Greg Bassuk, chief investment officer at AXS Investments, told CNBC that investors should brace for more near-term volatility ahead. Until recently, most investors were confident “that rate cuts would start in the first half of the year, and it’s looking more likely that the Fed will delay until the second half,” he said.
Bassuk added: “The seesaw market is really reflective of this tug-of-war between high sticky inflation â which suggests no near-term rate cuts â and strong earnings and other signs of a robust economy, which underscores investors belief that there’s more growth ahead for stocks.”
This week’s whiplash action put Wall Street in danger of snapping a five-week winning streak. The Dow is up 0.2% for the week, but the S&P 500 has only edged marginally higher while the Nasdaq is down 0.7%.
A.I. darling Nvidia remained higher Friday as it got another uber-bullish call from a Wall Street analyst, with Loop Capital saying it was set to eventually top $1,200. Applied Materials popped 8% on stronger-than-expected earnings.
Shares of food delivery service DoorDash dropped 9% on a wider-than-expected loss, while digital advertising company Trade Desk popped about 19% after topping analysts’ fourth-quarter revenue estimates and offering an upbeat outlook for the first quarter.