Wall Street closes lower, weighed down by inflation

The New York Stock Exchange ended lower on Thursday, weighed down by an American wholesale price index confirming stubborn inflation, which pushed up bond yields.

The Dow Jones index lost 0.35% to 38,905.66 points. The technology-dominated Nasdaq fell 0.30% to 16,128.53 points and the S&P 500 lost 0.2% to 5,150.48 points.

“It has been a clear day: the producer price index has renewed inflation fears, sending bond yields sharply higher,” said Peter Cardillo of Spartan Capital.

Thus, the yield on two-year bonds rose to 4.68% compared to 4.63% the day before. That on ten-year Treasury bonds climbed to 4.29% from 4.19%, reaching its highest level since the end of February.

PPI producer prices, also called wholesale prices, increased by 0.6% over one month in February, compared to 0.3% in January, driven by gasoline prices at the pump, following the curve of price on the consumer side which has also rebounded.

The increase is much stronger than the 0.2% expected by analysts. Over one year, wholesale prices climbed 1.6%, their strongest rate in five months.

The index “surprised on the rise in February with this acceleration in the prices of goods. For the Federal Reserve (Fed), this reinforces the idea of being patient on the monetary orientation to come”, judged Rubeela Farroqi, economist for HFE.

The Fed meets next week, but no rate cut is expected by the market.

“It is clear that the tone of the Fed’s press release will not be accommodating,” promises Peter Cardillo. The members of the Monetary Committee “will remain cautious and will probably not give any indication on when the first rate cut will take place”, he added.

These inflation data confirm that American prices are reluctant to fall further, as already shown on Tuesday by the CPI consumer price index which rebounded to 3.2% over twelve months against 3.1%.

Another indicator, retail sales for February, came in mixed, pointing to a slowdown in consumption, which could help slow inflation and achieve a soft landing.

Retail sales started to rise again (+0.6%) in February, but remained slightly below analysts’ expectations (+0.7%).

“The modest rebound in retail sales in February suggests that growth in consumer spending has slowed at the start of 2024,” commented Michael Pearce of Oxford Economics.

On the value side, Nvidia, the leader in the design of chips for AI, the darling of Wall Street, continued to lose ground, losing 3.24% to 879 dollars after experiencing a historic peak last week.

Tesla lost 4.12% to $162.50 as the stock has seen a correction since the start of the month, digesting questions from the automobile market on Thursday about demand for electric vehicles.

The online brokerage platform Robinhood climbed 5.19% after posting an increase in assets under management in February, notably thanks to the rebound in interest in cryptocurrencies.

Coinbase, the cryptocurrency exchange platform, returned 7.17% while bitcoin, at a historic high the day before, was subject to profit taking, falling 4.34% to $70,000 around 8:00 p.m. GMT .

Deferred payment specialist Affirm had a bad day, dropping 13.84% to $33.42, in the wake of weaker retail sales prospects.

Financially troubled US electric vehicle start-up Fisker collapsed 52%, with shares weighing just 15 cents. The Wall Street Journal reported that the company was seeking to hire a restructuring company.

The Dicks sports store chain soared 15.52% after better than expected fourth quarter results allowing it to increase its dividend by 10%.