By Geoffrey Smith
Investing.com -- U.S. stock markets resumed their sell-off at the open on Wednesday after figures showing that inflation accelerated even more quickly than feared in April.
The Bureau of Labor Statistics said the consumer price index rose 0.8% on the month, and 4.2% on the year, the highest annual rate of inflation since the eve of the financial crisis in 2008.
By 9:45 AM ET (1345 GMT), the Dow Jones Industrial Average was down 140 points, or 0.4%, at 34,137 points, while the S&P 500 was down 0.7% and the Nasdaq Composite was down 1.1%.
Surging prices for second-hand cars and trucks accounted for around one-third of the monthly increase. However, stocks of used car dealerships were unimpressed by confirmation of a trend that has already been in evidence for some time, driving up their prices by over 25% in the last two months alone. CarMax (NYSE:KMX) stock fell 1.8% and AutoNation (NYSE:AN) stock fell 2.1%.
The market responded to the figures by pricing in a first rate hike from the Federal Reserve before the end of next year, rather than in 2023 as the central bank is currently guiding. Hiowever, Richard Clarida, the Fed's vice-chair who is widely seen as one of the most influential figures when it comes to setting interest rate policy, again downplayed what he said was a 'transitory' spike in price.
“Readings on inflation on a year-over-year basis have recently increased and are likely to rise somewhat further before moderating later this year,” he said in the text of remarks to be delivered to the National Association for Business Economics on Wednesday. However, “I expect inflation to return to -- or perhaps run somewhat above -- our 2% longer-run goal in 2022 and 2023.”
Among the early movers were Fubotv (NYSE:FUBO) stock, which rose 17% after the sports streaming company said its revenue more than doubled in the first quarter. It also raised its guidance for the full year. The stock is still down by more than two-thirds from its peak at the end of 2020, however.
Palantir (NYSE:PLTR) stock slid 6.4%, extending its rollercoaster ride as a burst of short-covering in the wake of its earnings report proved short-lived.
Elsewhere, Alibaba ADRs (NYSE:BABA) stock gained 0.5% after an upgrade from JPMorgan (NYSE:JPM)'s analysts, while Xiaomi (OTC:XIACF) ADRs rose 6.8% after the U.S. government took it off a blacklist of companies owned or controlled by the Chinese military, effectively ending restrictions on U.S. investors owning the stock..