Hot US inflation report stops Wall Street stocks rebound

NEW YORK – A larger-than-expected rise in US wholesale prices rekindled worries over the timing of interest rate cuts and brought a halt to Wall Street’s recent rebound.

Markets shuddered after data released on Tuesday showed US consumer price inflation slowed less than expected in January, dealing a blow to hopes of an early interest rate cut by the US Federal Reserve.

After staging a small rebound, US equities slipped once more to finish the trading day firmly in the red.

The Dow Jones Industrial Average ended 0.4 percent lower, while the broad-based S&P 500 Index lost 0.5 percent and the tech-rich Nasdaq Composite Index dropped 0.8 percent.

Meanwhile, US Treasury yields, which can act as a proxy for interest rate expectations, rose on dwindling expectations of an early cut.

“Inflation concerns continued to drive Fed rate cut expectations lower and Treasury yields higher ahead of the weekend as import prices and the latest (Producer Price Index) release both came in quite hot,” said Oxford Economics lead analyst John Canavan in a note.

Europe’s stocks rallied Friday, with Frankfurt and Paris striking more record peaks after solid Asian gains, as investors shrugged off recessions in Britain and Japan.

London equities also jumped as investors drew comfort from a January rebound in UK retail sales, one day after the gloomy news that Britain had entered a technical recession.

UK retail sales volumes surged 3.4 percent in January, the fastest increase in almost three years, after sliding 3.3 percent in December, official data showed.

In Asia, Tokyo’s Nikkei index ended at a new 34-year high, partly supported by the Wall Street rally on Wednesday and Thursday, including in tech shares.

Japan also entered recession at the back end of 2023, according to data released Thursday, with the Asian nation being overtaken by Germany as the world’s third-largest economy.

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