US midday: Wall Street retreats after yet another upside surprise in consumer prices

Wall Street was again to be found on the back foot on Thursday following data showing consumer prices advancing at their fastest clip since February 1982.

In response to the latest CPI print, St.Louis Federal Reserve president, James Bullard, sounded an even more hawkish note than lately was the case.

Bullard said in an interview with Bloomberg, "I'd like to see 100 basis points [of interest rate hikes] in the bag by July 1."

"I was already more hawkish but I have pulled up dramatically what I think the committee should do."

As of 1852 GMT, the Dow Jones Industrials was trading 1.20% lower at 35,343.48, alongside a 1.36% drop for the S&P 500 to 4,523.96 and a 1.42% decline for the Nasdaq Composite to 14,281.32.

In parallel, the yield on the benchmark 10-year US Treasury note was climbing nine basis points to 2.02%.

Stock market volatility also picked up with the CBoE's VIX volatility index lighting up by 17.59% to 23.47.

According to the US Department of Labor, US CPI rose at a 0.6% month-on-month clip in January, pushing the annual rate of increase up from 7.1% for December to 7.5% (consensus: 7.3%).

"Today’s numbers likely will re-embolden the hawks seeking a rapid balance sheet run-off, though the loudest voices do not necessarily have the biggest influence on policy," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

"We still expect the first rate hike to be 25bp."

Shepherdson's forecasts called for a peak in core US CPI near 6.5% in March, followed by a rapid decline.

In particular, he noted the flat new vehicle prices following eight consecutive monthly gains and said that unchanged prices in January were the result of rising supplies of semiconductors, going on to predict outright falls in prices over the next few months.