NEW YORK CITY, RAW – Wall Street’s main indexes have fallen as a surge in US consumer prices last month deepened fears that high inflation is here to stay amid supply chain snarls.
The Labor Department’s report also showed that in the 12 months through October the consumer price index increased 6.2 per cent, the largest year-on-year advance since November 1990.
“Even though the Federal Reserve believes that inflation is transitory, the evidence is starting to add up that that’s not true,” said Rick Meckler, partner at Cherry Lane Investments In New Vernon, New Jersey.
“The Fed has made very few moves outside of what they’ve told the markets they plan to do but I think even they’ve got to be a little concerned by the strength of the increase.”
The report comes a day after producer prices data showed a solid rise in October and highlights the extent to which manufacturers were passing on higher costs to consumers, whose spending accounts for 70 per cent of the US economy.
The CBOE Market Volatility index, a gauge for investor anxiety, shot up to its highest level in nearly one month.
Six of the 11 major S&P 500 sectors fell in early trading, with technology and energy among the top decliners.
Mega-cap technology and communications companies including Apple Inc, Microsoft Corp, Meta Platforms Inc, formerly known as Facebook, and Alphabet Inc dropped between 1.2 per cent and 1.9 per cent.
Wall Street’s main indexes ended their long streak of record closing highs on Tuesday as investors booked profits from the recent run-up in gains, especially in the absence of market-moving catalysts.
“It is just a natural breather. The markets moved quite a bit in a short period of time off at September lows,” said Thomas Hayes, managing member, Great Hill Capital LLC, New York.
Wednesday’s losses also come after data showed Chinese factory gate prices hit a 26-year high in October while economic advisers to the German government said they expected the current rise in inflation to continue well into 2022.
In early trading, the Dow Jones Industrial Average was down 45.26 points, or 0.12 per cent, at 36,274.72, the S&P 500 was down 10.27 points, or 0.22 per cent, at 4,674.98 and the Nasdaq Composite was down 88.51 points, or 0.56 per cent, at 15,798.03.
Another report from the Labor Department showed initial claims for state unemployment benefits fell by 4000 to a seasonally adjusted 267,000 for the week ended on November 6.
Declining issues outnumbered advancers for a 1.03-to-1 ratio on the NYSE and a 1.44-to-1 ratio on the Nasdaq.
The S&P index recorded 13 new 52-week highs and no new lows while the Nasdaq recorded 38 new highs and 37 new lows.