🧐 ProPicks AI October update is out now! See which stocks made the listPick Stocks with AI

Stock market today: Dow slumps as Fed members say larger hikes not off table

Published 17-02-2023, 02:48 am
© Reuters.
US500
-
DJI
-
CSCO
-
TSLA
-
IXIC
-
US10YT=X
-
TWLO
-
ROKU
-
SPCE
-

By Yasin Ebrahim                                                                                                           

Investing.com -- The Dow closed lower Thursday as data pointing to underlying inflation pressures and a tight labor market stoked further fears about the Federal Reserve’s rate hike path at a time when some Fed members say a move back to bigger hikes isn't off the table. 

The S&P 500 fell 1.4%, the Dow Jones Industrial Average fell 1.3%, or 431 points, and the Nasdaq was down 1.8%.

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 a note.

Following the data, Federal Reserve Bank of St. Louis President James Bullard said the prospect of the Fed reverting to larger hikes isn't off the table.

“I wouldn't rule anything out for that meeting or any meeting in the future,” Bullard said Thursday following a presentation to the Greater Jackson Chamber in Jackson, Tennessee, referring to the prospect of a 50 basis point hike in March. 

Treasury yields jumped on the remarks, sending growth sectors of the market lower including consumer discretionary and tech which were the worst hit.

Tesla (NASDAQ:TSLA) gave up gains to trade more than 5% 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 11% 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 14%, 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 5%.

“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 down 0.6% 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

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.