Investing.com – Though U.S. stocks began Friday by following the global downturn in stocks, they begin to recover territory just before midday on Wall Street, in a session where U.S. inflation racked up its largest rise in four-and-a-half years and oil continued to move to the downside.
In a session with a sparse economic calendar, investors focused on the U.S. Commerce Department’s consumer price index (CPI) that showed inflation registered its largest gain in four-and-half years.
The that consumer prices remained flat from a month earlier in January, compared to expectations for decline of 0.1%.
Year-over-year, consumer prices were 1.4% higher from the same month a year earlier, above expectations for a 1.3% increase and after having risen 0.7% in December.
Consumer prices, excluding food and energy costs, increased by a seasonally adjusted 0.3%, above forecasts for a gain of 0.2%. This same measure had also risen 0.2% in December.
Core CPI increased at annualized rate of 2.2% last month, slightly above expectations for a 2.1% rise.
Core prices are viewed by the Federal Reserve (Fed) as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. The central bank usually tries to aim for 2% core inflation or less.
This firming of the inflation data could add to the likelihood that the Fed will hike interest rates this year.
Indeed, Cleveland Fed president Loretta Mester reiterated her outlook that the US economy would improve and the normalization of monetary policy would be gradual this year depending on the data.
“Thus, the actual path normalization takes could very well turn out to be either less gradual or more gradual than what we anticipate it to be today,” she said in a speech delivered in Florida.
The Fed’s next policy decision meeting will take place on March 15 and 16 and will be accompanied by updated forecasts from its members as well as a posterior press conference with Fed Chair Janet Yellen.
Meanwhile, profit taking in crude after a 14% rally continued to take its toll on the barrel of black gold and its corresponding effect on U.S. stocks related to the sector.
The turnaround began on Thursday after the Energy Information Administration said U.S. crude inventories rose by 2.1 million barrels last week, to a peak of 504.1 million barrels.
March future contracts which expire on Friday slumped -5.43%, to $29.10, at 16:21GMT or 11:21AM ET.
Crude oil futures for April delivery, priced two dollars above the March contract, plummeted -3.77% to $31.69.
Brent oil traded down -3.47% to $33.09.
On the business front, Nordstrom (N:JWN) plunged almost 8% as the apparel retailers quarterly earnings missed estimates.
Along the same lines, Deere & Company (N:DE) slumped 3.7% after the farming and construction equipment maker reported a drop in quarterly profit and lowered its 2016 forecast.
In the positive, Applied Materials (O:AMAT) jumped more than 8% and led the gainers on the Nasdaq 100 as the world’s largest maker of machinery for the fabrication of semiconductor chips reported earnings that beat consensus and gave an upbeat forecast.
Also worth noting in the tech sector, Yahoo (O:YHOO) rose 1.6% as it announced that it would explore strategic alternatives, alongside its plan to reorganize and spin off its Internet business.
Though the tech-heavy NASDAQ Compositemanaged to gain 0.39% to 4,505 points , the blue-chip Dow 30 sank 0.20% to 16,380, while the benchmark S&P 500 attempted to regain ground, shedding only 0.02%, to 1917 points.