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S&P 500 struggles to shake off Fed hike fears as inflation remains hot

Published 02/16/2023, 03:04 PM
Updated 02/16/2023, 03:14 PM
© Reuters

© Reuters

By Yasin Ebrahim                                                                                                           

Investing.com -- The S&P 500 slipped Thursday as data pointing to ongoing underlying inflation pressure and a tight labor market stoked further fears about the Federal Reserve’s rate hike path.

The S&P 500 fell 0.74%, the Dow Jones Industrial Average fell 0.60%, or 206 points, and the Nasdaq was down 0.90%.

The PPI rose 0.7% in January, topping economists' forecasts for a 0.4% increase, taking the year-over-year figure to 6.0% in January, ahead of the 5.4% expected.

The largest monthly PPI increase since June arrived just as initial jobless claims unexpectedly fell, pointing to a tight labor market and suggesting the Fed still has more work to do to bring down demand.

“Data releases like this are why policymakers continue to reiterate their intention to raise rates higher before pausing, and then leaving rates in a restrictive territory for quite a while,” Jefferies said in note.

Following the data, Federal Reserve Bank of St. Louis President James Bullard said the “current labor market situation is unprecedented,” as demand continues to far outpace supply. Further rate hikes, however, could help “lock-in the disinflationary trend during 2023," the St. Louis fed president added. 

Growth sectors of the market including consumer discretionary and tech were the worst hit.

Tesla (NASDAQ:TSLA) gave up gains to trade more than 1% lower after the electric vehicle maker recalled 362,000 EVs, equipped with its “Full Self Driving” software, which may cause vehicles “to act unsafe around intersections,” according to the National Highway Traffic Safety Administration.

News of the recall offset earlier positive news that Tesla had sold out its Model Y EVs in the U.S. for this quarter as recent price cuts spurred demand.

On the earnings front, Roku (NASDAQ:ROKU) was a standout performer, rising more than 17% after the streaming device marker reported upbeat guidance and a narrower-than-expected loss in the fourth quarter.

"Once macroeconomic trends improve, Roku is poised to return to meaningful profitability as a platform and FAST channel leader,” Wedbush said after lifting its price target on the stock to $80 from $75.

Twilio (NYSE:TWLO) was also a big winner, up 17%, after the communications company delivered strong guidance and fourth-quarter revenue that topped Wall Street estimates.

Cisco Systems Inc (NASDAQ:CSCO) reported better-than-expected second-quarter results as improving supply and strong demand bolstered performance. Its shares rose more than 4%.

“While we expect investors to focus on the dynamic between backlog and order growth, we believe the company is well-positioned as it focuses on higher growth,” Oppenheimer said as it lifted its price target on the company to $58.00 from $50.00.

In other news, Virgin Galactic Holdings (NYSE:SPCE) was up 4% after its VMS Eve suborbital spacecraft, previously referred to as WhiteKnightTwo, completed a test flight after more than 15 months out of action.

Latest comments

The market is spinning its wheels pre-election for a reason. Don't expect it to change.
Inflation's temperature is rising and investors do hate that. The next inflation report will be sometime in March.
one steaming pile of manure.
Yep, Democrat party style.
Vote democrat, get breadlines and gulags.
a bunch of incompetents work on wall street and pretend to be big players without cover, really d.......g
Nearly 300 points in losses magically vanish into thin air, starting with the flagrantly predictable, 10AM breaker fire, so a near 700 point loss was limited to under 400, after days of criminally manufactured, completely unjustified "gains."  Up or down, the US Ponzi Scheme is the laughingstock of the investing world.
Ha ha!  you're so bad at this.
still holding 100 QQQ 280 puts through 2/24. We'll see. I'm still looking for a 10% drop from the recent 310 high. Manipulation has been ridiculous! I was able to cash a mountain of .20 puts last Friday for .60, so there is hope.
I've been straddling for profit last 2 weeks.
if any one can know how to destroy market its idiots from wall street
really shit us market , Indian market is far far better and it's growing without much inflation fears
A fox lady, former vice chair in FED and now WHITE HOUSE economic advicer, she this fox is the one who made all these confusing of market from Jan to today for their political purpose. Democrates is forcing sacrifices to innocent investors and manipulated market, these are the reason why we stop vote to them. They did same ugly cheating in last summer just before mid election.
And this is how they slip out the back door! Bagholder Alert!!
Biden is too old to know economy , he know only to put market down he is destroying market in all usa and people lose money
Especially all those people with jobs.
And now old Joe and his newly funded IRS is coming after waitress's tips.
 "Biden's IRS nominee pledges no tax audit hike on earnings up to $400,000"  --  reuters.com, 2023-02-15
Love how they refuse to mention Biden since he took office as he has pushed us into a recession going for over a year now.
USA is expert to destroy market, hope , worries , etc is Bull shit , they know only fear and this idiotic
At 3PM ET, down like a Doodle Jump miss
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