US stocks decline as price, jobs data fuel rate hike concerns

Wall Street fell on Thursday after unexpectedly strong inflation data and a drop in weekly jobless claims added to fears that the Federal Reserve will keep raising interest rates to tame high prices. Decline in jobless claims, showed the economy is holding up amid the Federal Reserve’s rate hikes.

The Dow Jones Industrial Average lost 431.20 points, or 1.26%, to close at 33,696.85. The S&P 500 dipped 1.38% to 4,090.41, and the Nasdaq Composite fell 1.78% to close at 11,855.83. Microsoft and Disney contributed the most to the Dow’s decline, down 2.66% and 3.12% respectively. Tesla shed 5.69% following a vehicle recall, weighing on the S&P 500.

A Labour Department report showed the highest rise in producer prices in seven months in January as the cost of energy products surged.

It also showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, offering more evidence that the labor market remains tight.

Thursday’s economic data and other reports this week paint a picture of still-stubborn inflation and an economy that remains relatively strong in the face of the Fed’s rate hike cycle.

The Fed will likely keep raising rates, and stock markets do not want that. There are at least whispers now of the possibility of a 50 basis point hike at the next meeting.