Stocks Pare Losses as Data Presents Mixed Picture: Markets Wrap

US equity indexes pared losses as dip buyers emerged in the wake of data showing US producer prices rebounded in January by more than expected — more evidence that the Federal Reserve is likely to keep raising rates to battle sticky inflation.

(Bloomberg) — US equity indexes pared losses as dip buyers emerged in the wake of data showing US producer prices rebounded in January by more than expected — more evidence that the Federal Reserve is likely to keep raising rates to battle sticky inflation. 

The S&P 500 Index was down 0.4% after falling as much as 1.4% earlier on Thursday. Yield on the benchmark 10-year Treasury rose past 3.8% to the highest level this year. 

Federal Reserve Bank of Cleveland President Loretta Mester added to Wall Street worries in the morning when she said she had seen a “compelling economic case” for rolling out another 50 basis-point hike earlier this month. 

Yet stock bulls still found some things to like in the reports. While new US home construction retreated for a fifth month in January as elevated mortgage rates continue to keep a lid on housing demand, weekly jobless claims fell to 194,000, below expectations of 200,000.

“The economic data today painted a mixed picture,” Vital Knowledge founder Adam Crisafulli wrote. “Our view remains that the SPX is ahead of itself, but dips should still be bought (ideally at 4000-4050).” 

“All of these intraday rallies we’ve seen sort of leans on argument that at the very least the better economic data points to a soft landing or a no landing scenario,” said Art Hogan, chief market strategist at B. Riley Wealth. “That’s what the equity bulls are hanging their hat on right now.”

“Overall, layoffs remain low, suggesting companies remain reluctant to reduce their workforce for now,” wrote Rubeela Farooqi, chief US economist at High Frequency Economics. “A rapid rise in interest rates has yet to impact the labor market. But an adjustment is likely over coming months as the cumulative and lagged effects of restrictive monetary policy spread more broadly through the economy.”

Thursday’s economic prints added further details for Fed policymakers plotting the path for rate hikes, after Wednesday’s US retail sales in January jumped by the most in almost two years.

“This data was just a reminder that the battle against inflation is not easy,” Peter Boockvar, chief investment officer at Bleakley Financial Group, wrote. “Cost pressures basically got into every single nook and cranny of the economy over the past few years and it doesn’t just magically disappear.”

Investors have been upping their bets on how far the Fed will raise rates this tightening cycle. They now see the federal funds rate climbing to 5.24% in July, according to trading in the US money markets. That compares with a perceived peak rate of 4.9% just two weeks ago, and the central bank’s current 4.5% to 4.75% target range. 

Read More: US Rate Hikes Threaten to Outstrip Fed, Wall Street Predictions

“You will not sustainably get to 2% inflation when you have a labor market that is this tight,” Steve Chiavarone, senior portfolio manager and head of multi-asset solutions at Federated Hermes, said by phone. “It is so completely out of whack.” 

The Dow Jones Industrial Average fell 0.4%. So far this year the 30-member blue-chip gauge is up just 2%, compared with a 7% gain in the S&P 500. The 5 percentage-point gap between the two makes the Dow’s start to a year the weakest relative to the S&P 500 since 1934, data compiled by Bloomberg show.

Bitcoin optimism continued as the cryptocurrency topped $25,000 for the first time since August as traders’ fears of a US regulatory crackdown abated. 

Oil fluctuated as investors assessed more evidence of higher energy demand in China and a large build in US crude stockpiles. Gold was steady.

Key events:

  • France CPI, Russia GDP Friday

Some of the main moves in markets:


  • The S&P 500 fell 0.4%, more than any closing loss since Feb. 9 as of 1:10 p.m. New York time
  • The Nasdaq 100 fell 0.5%, more than any closing loss since Feb. 10
  • The Dow Jones Industrial Average fell 0.4% to the lowest since Feb. 10
  • The MSCI World index was little changed


  • The Bloomberg Dollar Spot Index was little changed
  • The euro was little changed at $1.0695
  • The British pound was little changed at $1.2021
  • The Japanese yen surged 0.2%, more than any closing gain since Feb. 7


  • Bitcoin rose 3.2% to the highest in about eight months
  • Ether rose 3.2% to the highest since Sept. 12


  • The yield on 10-year Treasuries advanced three basis points to 3.84%
  • Germany’s 10-year yield was little changed at 2.48%
  • Britain’s 10-year yield advanced one basis point to 3.50%


  • West Texas Intermediate crude rose 0.1% to $78.70 a barrel
  • Gold futures rose 0.4% to $1,852 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Elena Popina, Cristin Flanagan and Emily Graffeo.

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