Stock market under pressure after jump in inflation data – MarketWatch

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U.S. stock-market indexes traded lower on Wednesday as investors turned cautious after January data showed consumer prices saw the strongest rise in five months.

The cost of rent, clothes, gasoline, health care and auto insurance all rose, contributing to the 0.5% jump in the consumer-price index. Core inflation, which strips out volatile food and energy prices, rose by 0.3%.

Analysts said stronger inflation data may force the Federal Reserve to be more aggressive in tightening policy.

Check out: Why this investment pro thinks inflation fears are overblown

And read: Higher wages spook Wall Street, but fresh fears of inflation look overdone

What are the main benchmarks doing?

The S&P 500 SPX, -0.36% fell 13 points, or 0.5%, to 2,650 with all 11 main sectors trading lower.

The Dow DJIA, -0.37% slumped 122 points, or 0.5%, to 24,514.

The Nasdaq Composite COMP, -0.11% declined 9 points, or 0.1%, to 7,006.

What could help drive markets?

Inflation scares that were responsible for the tumble over the past few weeks appear to have returned on Wednesday with the release of CPI data.

The U.S. dollar perked up while the yields on Treasurys also rose.

Read: Here’s a 10-step plan the stock market must complete to get back on track

And see: This market selloff was overdue, but now it looks overdone

Despite the inflation rise, the overall picture hasn’t changed much. The year-over-year increase in the CPI was unchanged from December at 2.1%. The 12-month rate of core inflation was also flat at 1.8%.

Meanwhile, instead of a forecast rise, sales at U.S. retailers fell by 0.3% in January—the biggest drop in almost a year—largely because of declines at auto dealers and home centers. And a previously reported increase in sales in December was wiped out.

What are strategists saying?

“Today’s inflation data confirmed what we already saw in wage gains and Beige Book reports. The reaction in stocks suggests that investors were expecting a more gradual rise in inflation,” said Kristina Hooper, chief global market strategist at Invesco.

The Federal Reserve’s hand “may be forced if data on inflation continues to come in higher than expected. The added risk is that the FOMC in 2018 is not the same as the FOMC in 2017, we have a lot more hawks in the committee,” Hooper said.

What are other assets doing?

European stocks SXXP, +0.45% mostly gained, while Asian markets finished mixed.

Gold futures GCG8, +0.43% edged higher, oil futures CLH8, -1.39% lost ground, and the ICE U.S. Dollar Index DXY, +0.17% climbed modest after data releases, up 0.2% to 89.893.

The yield on the 10-year Treasury note rose 4 basis points to 2.88.

Which stocks look like key movers?

Fossil Group Inc.’s stock FOSL, +73.12% surged 79% after the watch seller late Tuesday posted better-than-expected earnings and KeyBanc analysts hiked their price target.

Chipotle Mexican Grill Inc.’s shares CMG, +15.32% soared 12% after the burrito chain late Tuesday named a new CEO: Brian Niccol, previously the CEO for Yum Brands Inc.’s YUM, -0.69% Taco Bell business.

In earnings news, Hilton Worldwide Holdings Inc. HLT, +0.71%  beat profit forecasts, sending shares 2% higher.

Molson Coors Brewing Co. TAP, +2.66% shares rose 2.7% after better-than-expected earnings results.

SodaStream International Ltd. SODA, +1.42%  shares are up 9.4% after the company reported fourth-quarter earnings and revenue that beat consensus.