Dow drops on fresh US inflation data

US stocks sharply dropped on Friday following the Federal Reserve’s favourite inflation gauge showing a stronger-than-expected increase in prices last month.

The Dow Jones Industrial Average fell by 390 points, or 1.2%. The S&P 500 and Nasdaq Composite retreated 1.6% and 2.0%, respectively. The Dow fell as much as 510 points, or 1.54%, earlier in the trading session.

Boeing shares slipped more than 4% after the company temporarily halted delivery of its 787 Dreamliners over a fuselage issue. Shares of Microsoft and Home Depot also fell more than 1%.

The core personal consumption expenditures price index rose 0.6% in January and 4.7% from the prior year, coming above economists’ expectations. The report added to worries that the Fed may have to keep rates higher for longer to quell inflationary pressures.

Any disappointing data is going to have an outsized impact as markets are seeing in the early movements. This may test its recent lows, but analysts do not think it is going to push stocks to new lows. The performance of US stocks, however is looked upon as one more confirmation that the Fed is likely going to go to 5% and 5.25%, which is consensus.

The major averages are headed for a losing week. The S&P 500 is down 1.64% through Friday’s open, and is set for its worst week since Dec. 16. The Dow is down nearly 1.99% this week, and headed for its fourth straight losing week. The Nasdaq is 1.67% lower, and on pace for its second negative week in three.