Stocks fell Thursday as traders digested another hot inflation report along with jobless claims showing the economy is holding up amid the Federal Reserve’s rate hikes.
TheDow Jones Industrial Average shed284 points, or 0.83%.The S&P 500dipped 1.12% and theNasdaq-Compositefell 1.40%.
Stock future slid further afterJanuary’s producer price index,another inflation measure, rose 0.7% on the month while economists surveyed by Dow Jones expected a 0.4% increase. Initial jobless claimsunexpectedly fellfor the week ending February 11, per a Labor Department report.
The new data comes after January’s consumer price index and retail sales report were both higher than expected, suggesting that the Federal Reserve may have further to go in its efforts to tame inflation.
“Both inflation readings this week point to the stickiness of inflation and that the fight isn’t over, especially when considering today’s PPI reading was the highest month-over-month increase since early summer<′ said Mike Loewengart, head of model portfolio construction at Morgan Stanley.
Loewengart added that declining jobless claims suggest the labor market remains tight.
“It shouldn’t be a surprise to see the market take a breather as hopes of a dovish Fed in the coming months fade,” he said. “Bottom line is investors should recognize inflation may not return to normal levels as quick as many hope, and with that may come more volatility.”
Still, markets have remained resilient. On Wednesday, theDow Jones Industrial Average rose 38.78 points, or 0.11%, and theS&P 500 climbed 0.28%. Meanwhile, theNasdaq Compositenotched its third straight day of gains, rising 0.92%.