US STOCKS-Wall St lower after CPI data; Yellen speech awaited

  • Reuters
  • Stock Market News
US STOCKS-Wall St lower after CPI data; Yellen speech awaited
Credit: © Reuters.

* Core inflation at highest since January 2013

* Yellen speaks at 1:00 p.m.

* HP rises on low forecast for split-related costs

* Ctrip up on deal to buy stake in China travel firm

* Indexes down: Dow 0.03 pct, S&P 0.01 pct, Nasdaq 0.1 pct (Adds details, changes comment and updates prices)

By Tanya Agrawal

May 22 (Reuters) - U.S. stocks fell in late morning trading on Friday, retreating from recent record highs, as investors await Federal Reserve Chair Janet Yellen's economic outlook for clues on the timing of a rate hike after new data showed a rise in inflation.

Yellen is expected to highlight the economy's steady job growth, while April's consumer price index data is likely to bolster Fed's case for its first policy tightening in nearly a decade. Yellen's speech will start at 1:00 p.m. ET (1700 GMT).

Consumer prices moderated last month, data showed, but the so-called core consumer price index, which strips out food and energy costs, posted its largest gain since January 2013. ID:nLNNMGEBAU

While the Fed, which has a 2 percent inflation target, is broadly expected to raise rates this year, the timing of the hike has kept the market on tenterhooks.

"September is the most likely scenario and Yellen has been very keen on the job numbers which has improved," said Linda Duessel, market strategist at Federated Investors in Pittsburgh.

"We think it is a one and done type situation."

Recent economic data has been sluggish, prompting investors to bet that interest rates will stay near zero till at least the later part of the year and pushing the major stock indexes to record territory over the past couple of weeks.

Both the Dow and the S&P hit new records this week, although they have traded in a narrow range and volumes have been subdued as the quarterly earnings season draws to a close.

At 11:24 a.m. ET (1524 GMT) the Dow Jones industrial average .DJI was down 54.79 points, or 0.3 percent, at 18,230.95, the S&P 500 .SPX was down 3.07 points, or 0.14 percent, at 2,127.75 and the Nasdaq Composite .IXIC was down 3.53 points, or 0.07 percent, at 5,087.27.

The dollar turned higher and U.S. bond yields rose after the stronger-than-expected rise in core consumer prices.

Eight of the 10 major S&P 500 sectors were lower, led by a 0.7 percent drop in the utilities index .SPLRCU .

HP HPQ.N shares rose 3.9 percent to $35.15 after it forecast split-related costs below expectations and its quarterly profit beat market estimates. ID:nL3N0YC5H8

Expedia EXPE.O rose 4.7 percent at a record of $110.94 after selling its entire stake in Chinese online travel company ELong LONG.O to CTRP.O and others. ID:nL3N0YD43W

Ctrip jumped 13.3 percent to $81.57, giving the biggest boost to the S&P after Apple AAPL.O . ELong LONG.O soared as much as 32 percent to a four-year high, before dialing back to trade up 4.7 percent at $111.

Aeropostale ARO.N slumped 15.4 percent to $2.19 after the teen apparel retailer forecast a bigger-than-expected quarterly loss. ID:nL3N0YC5GJ

Declining issues outnumbered advancers on the NYSE by 1,872 to 973, for a 1.92-to-1 ratio on the downside. On the Nasdaq, 1,521 issues fell and 1,044 advanced for a 1.46-to-1 ratio favoring decliners.

The S&P 500 posted 22 new 52-week highs and two new lows; the Nasdaq recorded 60 new highs and 24 new lows. (Editing by Savio D'Souza)

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