Wall Street tumbled Thursday, and stocks fell by the most in four weeks following more evidence that high inflation is staying stickier than expected, per the AP. A suite of mixed data on the economy also chipped away at hopes that the Fed could get inflation to continue to come down without creating a severe recession.
- The S&P 500 fell 57.19 points, or 1.4%, to 4,090.41.
- The Dow Jones Industrial Average fell 431.20 points, or 1.3%, to 33,696.85.
- The Nasdaq composite fell 214.76 points, or 1.8%, to 11,855.83.
Thursday’s inflation report showed that prices at the wholesale level were 6% higher last month than a year earlier. While that was a slowdown from December’s rate, it was worse than what economists expected. Perhaps more concerning was that inflation accelerated in January on a month-to-month basis even after stripping out prices for food, energy and other layers. The inflation report thudded onto Wall Street along with a batch of other data painting a mixed picture of the economy. For example, fewer workers applied for jobless benefits last week than expected, a sign that layoffs remain low across the economy. That’s good news for workers and another signal of strength for the job market, but the Fed worries it could also add upward pressure on inflation.
Other reports showed a measure of manufacturing activity in the mid-Atlantic region plunged this month, while homebuilders broke ground on fewer homes last month than economists expected. Altogether, the reports cast some doubt on Wall Street's hopes that the Federal Reserve could manage to slow the economy just enough to stamp out inflation but not so much that it creates a severe recession. Hopes for a “soft landing” for the economy nevertheless remain firmly in the market, with the S&P 500 still up 6.5% since the turn of the year. (More stock market stories.)
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