Stocks slid Friday after yet another hot inflation report stoked fears that Federal Reserve rate cuts may not arrive until later than anticipated this year.
The producer price index for January, a measure of wholesale inflation, increased 0.3%. Economists polled by Dow Jones had anticipated a gain of 0.1%. Excluding food and energy, core PPI rose increased 0.5%, higher than the expectations for a 0.1% advance.
The 10-year Treasury yield spiked above 4.3% following the hot PPI reading. At one point, the 2-year Treasury yield topped 4.7%, the highest since December.
The S&P 500 fell 0.48% to end at 5,005.57, and the Dow Jones Industrial Average slid 145.13 points, or 0.37%, settling at 38,627.99. The Nasdaq Composite lost 0.82% to finish at 15,775.65.
All three major indexes broke their five-week winning streaks to end the week in the negative. The S&P 500 ended the week lower by 0.42%, while the Dow slipped 0.11%. The Nasdaq tumbled 1.34%.
Applied Materials popped 6% Friday on stronger-than-expected earnings. Shares of food delivery service DoorDash dropped 8% on a wider-than-expected loss, while digital advertising company Trade Desk popped about 17% after topping analysts’ fourth-quarter revenue estimates and offering an upbeat outlook for the first quarter.
US crude oil prices reached their highest settlement since November, driven by escalating tensions in the Middle East which overshadowed concerns about U.S. inflation and demand uncertainties for the year. Simmering conflicts between Israel and Lebanon, with Israel bombing southern Lebanon in retaliation for rocket attacks and Hezbollah threatening retaliation, added to the regional instability.
Turning to US sectors, all closed lower overnight except for, Materials, Health and Consumer Staples. Communication Services was the worst performer.
When looking at the Australian landscape, the ASX 200 index may reach record highs this week as Australia’s earnings season intensifies, with nearly 80 major listed companies set to report results, including heavyweights such as BHP, Rio Tinto, Fortescue Metals, Lendlease, Stockland, Woolworths, and Qantas. Both Australian and US earnings seasons have pleasantly surprised market participants, buoying equity markets, with a significant portion of companies reporting results above expectations, particularly in the United States, where 81 percent of S&P 500 companies have exceeded expectations.
Futures
The SPI futures are pointing to a 0.1 per cent gain.
Currency
One Australian dollar at 7.40am was buying 65.32 US cents.
Commodities
Gold added 0.46 per cent. Silver gained 2.28 per cent. Copper jumped 2.14 per cent. Oil added 1.49 per cent.
Figures around the globe
European markets closed higher. London’s FTSE gained 1.50 per cent, Frankfurt added 0.41 per cent, and Paris closed 0.32 per cent higher.
Turning to Asian markets, Tokyo’s Nikkei added 0.86 per cent, Hong Kong’s Hang Seng gained 2.48 per cent and China’s Shanghai Composite was closed.
On Friday, the Australian share market closed 0.69 per cent higher at 7,658.32.
Ex-dividends
Diverger Limited (ASX:DVR) is paying 10 cents fully franked
Dividends payable
Nickel Industries Ltd (ASX:NIC)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
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