Highlights
Another hot inflation report and hawkish Federal Reserve comments hit equities again Thursday. The Dow Jones industrial average fell 1.3 percent, the S&P 500 lost 1.4 percent, and the NASDAQ dropped 1.8 percent. US Treasury yields rose and the dollar gained versus most currencies while oil prices declined.
Equities recovered through midday as bond yields retreated from early highs and the S&P 500 found buyers at 4,100, but the market tanked into the close after hawkish comments from St. Louis Fed President James Bullard, who told reporters he would not rule out a 50-basis point move at the March meeting, and that he had argued for 50 basis points at the February meeting. Earlier, Cleveland Fed President Loretta Mester said she too saw a case for 50 basis points increase at the last Fed policy meeting too. Neither Bullard nor Mester are voting members of the Fed's policy committee this year but they are considered influential.
The market came under pressure from the open after producer prices came in up 0.7 percent in January, well above the expected 0.4 percent, and jobless claims were reported at 194,000, below the expected 200,000, more evidence of a tight job market despite the Fed's campaign to slow the economy. The market chose not to focus on weaker than expected housing starts and permits and an unexpected drop in the Philadelphia Fed manufacturing index.
Among stock sectors, weakest were information technology, utilities, industrials, real estate, materials, and consumer staples. FANMAG stocks had a bad day. Paramount reported a big earnings miss to weigh on media and entertainment. On the positive side, Cisco rallied on an earnings beat to boost computer hardware and networking shares.
Equities recovered through midday as bond yields retreated from early highs and the S&P 500 found buyers at 4,100, but the market tanked into the close after hawkish comments from St. Louis Fed President James Bullard, who told reporters he would not rule out a 50-basis point move at the March meeting, and that he had argued for 50 basis points at the February meeting. Earlier, Cleveland Fed President Loretta Mester said she too saw a case for 50 basis points increase at the last Fed policy meeting too. Neither Bullard nor Mester are voting members of the Fed's policy committee this year but they are considered influential.
The market came under pressure from the open after producer prices came in up 0.7 percent in January, well above the expected 0.4 percent, and jobless claims were reported at 194,000, below the expected 200,000, more evidence of a tight job market despite the Fed's campaign to slow the economy. The market chose not to focus on weaker than expected housing starts and permits and an unexpected drop in the Philadelphia Fed manufacturing index.
Among stock sectors, weakest were information technology, utilities, industrials, real estate, materials, and consumer staples. FANMAG stocks had a bad day. Paramount reported a big earnings miss to weigh on media and entertainment. On the positive side, Cisco rallied on an earnings beat to boost computer hardware and networking shares.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.
