US close: Stocks weaker as consumer prices continue to run hot

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Wall Street stocks were weaker at the close on Thursday, following data showing consumer prices advancing at their fastest clip since February 1982.

The Dow Jones Industrial Average ended the day down 1.47% at 35,241.59, while the S&P 500 lost 1.81% to 4,504.08 and the Nasdaq Composite was off 2.1% at 14,185.64.

All eyes were on the latest cost-of-living data, which picked up more quickly than expected at the start of 2022 amid broad-based gains among the various categories of goods and services.

According to the US Department of Labor, in seasonally adjusted terms, the Consumer Price Index advanced at a month-on-month pace of 0.6% in January, beating consensus forecasts for a 0.5% rise.

That pushed the annual rate of CPI from 7.1% in the month before to 7.5%, while food and energy prices both jumped at a 0.9% pace on the month.

At the core level meanwhile, which excludes food and energy prices, CPI advanced at an annual pace of 6.0%.

In December, core CPI had risen at an annual clip of 5.5%.

New vehicle prices were unchanged in comparison to December, but those for used cars and trucks continued to bound ahead, rising by 1.5%.

"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 25 basis points."

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.

Following the CPI print, St. Louis Federal Reserve president James Bullardsounded an even more hawkish note.

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."

In equity markets, Twitter closed down 1.98% despite the social network meeting expectations and announcing a new $4bn share buyback.

Retail credit provider Affirm Holding tumbled 21.42% after it reported lower revenue than expected on higher-than-anticipated volumes.

On the upside, Disney jumped 3.35% after it reported record revenue and profits topping $1bn, while Coca-Cola was 0.56% firmer after an expectations beat.

Dow Jones - Risers

Walt Disney Co. (DIS) $152.16 3.35%
Boeing Co. (BA) $218.75 1.34%
Coca-Cola Co. (KO) $61.38 0.56%
Merck & Co. Inc. (MRK) $76.56 0.04%
Honeywell International Inc. (HON) $230.94 0.00%
Dowdupont Inc. (DWDP) $30.52 0.00%
Travelers Company Inc. (TRV) $172.43 -0.17%
Caterpillar Inc. (CAT) $203.07 -0.26%
JP Morgan Chase & Co. (JPM) $156.04 -0.42%
American Express Co. (AXP) $195.51 -0.45%