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Wall Street ends lower as economic data raises long-term inflation threat

Stock MarketsNov 10, 2021 06:47PM ET
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© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 20, 2021. REUTERS/Brendan McDermid

By Stephen Culp

NEW YORK (Reuters) - Wall Street closed sharply lower on Wednesday as surging consumer prices curbed investor risk appetite, and stoked worries of a protracted wave of red hot inflation.

All three major U.S. stock indexes fell, extending their losses throughout the trading day and adding to Tuesday's sell-off which snapped the S&P 500's and Nasdaq's eight-session runs of all-time closing highs.

"It's not surprising that after what was truly a historic run for the market to take a pause," said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky. "But we do think there are enough tailwinds heading into year-end to move the market higher."

The Labor Department's consumer price index (CPI), delivered a hotter-than-expected jump of 0.9% and the fastest year-on-year gain in 31 years.

The report hinted that the persistently tangled global supply chain could result in the current inflation wave taking longer to abate than many - including the U.S. Federal Reserve - had hoped.

"The inflation story is really the driver that drives all things," Mayfield added. "It will affect Fed policy and fiscal policy, it's the driver of interest rates. It's hard to talk about anything but inflation."

And Gregory Daco, chief economist of Oxford Economics, believes this report means current price spikes have some staying power.

"I think things will continue to get worse before they get better in terms of the inflation outlook because we don't see core inflation peaking until sometime in early 2022," Daco said.

The graphic shows core CPI along with other indicators and where they stand relative to the Fed's average annual 2% inflation target.

(Graphic: Inflation: https://graphics.reuters.com/USA-STOCKS/dwpkrezjyvm/inflation.png)

The Dow Jones Industrial Average fell 240.04 points, or 0.66%, to 36,079.94, the S&P 500 lost 38.54 points, or 0.82%, to 4,646.71 and the Nasdaq Composite dropped 263.84 points, or 1.66%, to 15,622.71.

Of the 11 major sectors in the S&P 500 eight closed red, with energy suffering the biggest percentage losses. Utilities led the gainers.

Tech weighed heaviest on the S&P 500, with megacaps Apple Inc (NASDAQ:AAPL) and Microsoft Corp (NASDAQ:MSFT) among the biggest drags.

Third-quarter earnings season has reached the final stretch, and of the companies having reported, 81% have beaten street expectations.

Walt Disney (NYSE:DIS) Co shares dropped more than 4% in after-hours trading after the media company reported disappointing streaming subscriber numbers.

Tesla (NASDAQ:TSLA) Inc rose 4.3%, reversing several sessions of declines in the wake of CEO Elon Musk's polling Twitter (NYSE:TWTR) users on whether he should sell 10% of his stake in the company he founded.

This comes as rival electric vehicle maker Rivian Automotive Inc made its splash as a publicly traded company, raising $12 billion. Its shares surged 29.1%.

Retail trading platform Robinhood Markets Inc (NASDAQ:HOOD) plunged 6.0%, adding to its losses two days after reporting a security breach affecting 5 million customers.

Declining issues outnumbered advancing ones on the NYSE by a 2.26-to-1 ratio; on Nasdaq, a 2.50-to-1 ratio favored decliners.

The S&P 500 posted 26 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 95 new highs and 121 new lows.

Volume on U.S. exchanges was 11.72 billion shares, compared with the 10.89 billion average over the last 20 trading days.

Wall Street ends lower as economic data raises long-term inflation threat
 

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Comments (28)
Jouni Matero
Jouni Nov 11, 2021 4:05AM ET
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See, it's already recovering. So much for inflation fears, greed it is lol
Md Ripon
Md Ripon Nov 11, 2021 1:08AM ET
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Jouni Matero
Jouni Nov 10, 2021 2:24PM ET
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TSLA up. Funny thing thou...Just visited my friend who works as a car sales man. He said all auto manufacturers are facing extreme supply shortage in materials and chips, especially those in EV and that issue won't stay hidden beneath the surface more than a month of two.
Erski Gumby
SB20 Nov 10, 2021 2:24PM ET
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Your friend may be behind a month or two with that info. lol
Tebogo Phetabosigo
Tebogo Phetabosigo Nov 10, 2021 2:21PM ET
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Tapering is clear as blue sky, ongoing transitory broken record was bad for this year. With wage increase, supply shortage, and high oil prices, i believe inflation is now out of control and rearing its ugly head.
Jouni Matero
Jouni Nov 10, 2021 2:18PM ET
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I bet tomorrow these figures are twisted in Wall Street so that, suddenly it's all good for the market. Make no mistake about it, it's all manipulated in the name of greed.
Pratt Man
Pratt Man Nov 10, 2021 2:18PM ET
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Since 2018, inflation has averaged 3.1% per year.
Ac Tektrader
Ac Tektrader Nov 10, 2021 2:18PM ET
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Jouni...when they manipulate it's not greed it's fear.
Adel Mohd
Adel Mohd Nov 10, 2021 2:02PM ET
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Soon they will announce negative rate adaption
jj mm
jj mm Nov 10, 2021 2:02PM ET
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it would be funny
Erski Gumby
SB20 Nov 10, 2021 1:50PM ET
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mark twain
mark twain Nov 10, 2021 1:18PM ET
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Fed can't stop printing. Can't fund the off switch.
Alex Albertini
Alex Albertini Nov 10, 2021 1:16PM ET
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They will say that inflation is transitory for the next 10 years
Ronald Warren
Ronald Warren Nov 10, 2021 1:12PM ET
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Manipulation at it's finest: VIX is up .02, but NASDAQ is down 150. They're deflecting!!
Empire Destroyer
Empire Destroyer Nov 10, 2021 1:12PM ET
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Last Friday VIX up 5% and markets make ATH.... manipulation???
jj mm
jj mm Nov 10, 2021 1:12PM ET
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of course it's a manipulation on real time.
ben sc
ben sc Nov 10, 2021 1:10PM ET
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The next talking point from Fed will be that all inflation is transitory.......but sure seems like a bad idea to dire up the printing presses again for another 2T. just double the inflation we've seen in last 18 months. no way wages can keep up. Guaranteed recession.
Ron Moorman
Ron Moorman Nov 10, 2021 1:10PM ET
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And for that we can thank the Socialist Democrat Party. The government furnishes everything for free except that it isn't free.
Raj Shekar
Raj Shekar Nov 10, 2021 1:03PM ET
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COVID has opened the possibility to manipulate markets in best possible ways. FED like many other economies is assisting this insane rallies which may not end well for common investors/traders.
Ronald Warren
Ronald Warren Nov 10, 2021 1:00PM ET
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Tesla is up today!! The insanity of investors taking security in a company with a PE of 360 (give or take).
Mustapha Shahada
Mustapha Shahada Nov 10, 2021 1:00PM ET
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thank you very
jj mm
jj mm Nov 10, 2021 12:46PM ET
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Transitory inflation? lol....come on Powell you can put more money and keep saying everything is fine and inflation is transitory go baby go
Casador Del Oso
Casador Del Oso Nov 10, 2021 12:30PM ET
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It's not inflation fears anymore, it's inflation reality. Look out below, Joe.
Ricardo Diogo
Rcd72 Nov 10, 2021 12:00PM ET
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inflation higher than GDP.....
Ricardo Diogo
Rcd72 Nov 10, 2021 11:59AM ET
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thank you Powell and your 120 B month speculation support
Ronald Warren
Ronald Warren Nov 10, 2021 11:59AM ET
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120 billion is the tip of the iceberg.
Matt Brackley
Matt Brackley Nov 10, 2021 11:49AM ET
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stagflation
John Klan
John Klan Nov 10, 2021 11:40AM ET
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Gas prices doubled in 10 months. OPEC loves some Biden.
Mark Stallone
Mark Stallone Nov 10, 2021 11:37AM ET
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RELAX. It's all part of Building Back "Better". Joey and Kam Kam got this.
Chris Hall
Chris Hall Nov 10, 2021 11:37AM ET
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the inflation formula has been tweaked since the 80s to reflect whatever they want the true inflation is actually higher than was in the 70s! what made the 70s inflation skyrocket was fuel prices... they keep alot key data out of their formula! 6% is laughable true numbers are closer to 25%
Paul Browning
Paul Browning Nov 10, 2021 11:37AM ET
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The M3 is the real number to watch and they quit showing that many years ago.
Ronald Warren
Ronald Warren Nov 10, 2021 11:37AM ET
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Exactly!! I pay attention when I shop! Everything I touch has increased 20 to 30% minimum!! Several weeks ago the federal government increased food stamp benefits by 27%. What does that tell you?
TheEnd IsNigh
TheEnd IsNigh Nov 10, 2021 11:37AM ET
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The property tax bill I just received (for 2022) for my house increased by 25% from my 2021 bill. The assessed price remained the same, incase anyone is wondering. 25%!!! And I live in a blue county of a red state. Can't wait to see what the 2023 bill will look like, this time next year.
Vlad Lozovskiy
Vlad Lozovskiy Nov 10, 2021 9:51AM ET
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Inflation fears?  Dude!  Inflation is here full swing
andy matalobos
andy matalobos Nov 10, 2021 9:37AM ET
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It's time to move to another more civilized Banana Republic country......we are definitely destroying this one.
Chris Hall
Chris Hall Nov 10, 2021 9:37AM ET
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wont take much to have a total collapse in society... already started
Stan Smith
Stan Smith Nov 10, 2021 9:36AM ET
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LOL...how about a headline on rocketing Gold and Silver....the hedge twins
Paul Browning
Paul Browning Nov 10, 2021 9:36AM ET
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I hadn't noticed this but the accepted barometer of inflatiob, copper has more than doubled since April of 2020. BUT technically
Paul Browning
Paul Browning Nov 10, 2021 9:36AM ET
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it's been forming a very nice top since April of 2021.. Since I believe the real problem is deflation, watcj out for a whipsaw.
 
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