- Inflation picks up, in line with Fed's target
- Jobless claims sink, industrial production weakens
- Wal-Mart disappoints with Q1 results
Dow Jones: -0.64%
S&P 500: -0.82%
US stocks declined sharply on Thursday as investors weighed a barrage of mixed economic data, including a pick-up in inflation, an unexpected drop in jobless claims and a surprise slide in industrial production.
Inflation, in particular, was in keen focus today with the annual rate rising to 2%, in line with the Federal Reserve's target. Craig Erlam, Market Analyst at Alpari, said that a 2% rate could put "more pressure on the Fed to taper at a faster pace and even raise rates earlier than currently planned, especially if it continues to pick up in the coming months".
Markets were tracking declines seen in Europe after Eurozone economic growth remained unchanged at 0.2% in the first quarter of 2014, disappointing economists who had expected an acceleration to 0.4%.
The Dow Jones Industrial Average and S&P 500
were trading 0.6% and 0.8% lower, respectively, falling further the record highs reached earlier in the week. The Nasdaq, meanwhile, dropped 1.2%.
Economic data comes in mixed
Initial US weekly unemployment claims fell by 24,000 to 297,000 over the seven days ending on May 10th, hitting a post-recession low, according to the US Department of Labor. The consensus estimate had been for claims to edge higher to 320,000.
According to the Bureau of Labor Statistics, US consumer price inflation picked up to an annual rate of 2% in April, the highest level since last July. This was up from 1.5% in March but more or less in line with what was estimated by analysts. The month-on-month rate increased from 0.2% to 0.3%, as expected. Core inflation, however, came in ahead of forecasts.
US industrial production unexpectedly declined by 0.6% in April, down from an upwardly revised 0.9% gain in March; the estimate was for no change. However, analysts at Capital Economics said the fall is "not as bad as it looks as some of it was due to the unwinding of temporary weather effects".
Regional output data was also in focus today as the Empire State manufacturing index surged to 19 in May, well above 1.3 the month before and the consensus forecast of 5.0. Meanwhile, the Philly Fed index fell to 15.4 from 26.6.
Wal-Mart slides after Q1 results
Wal-Mart slumped after the world's largest retailer reported a fall in first quarter profit.
Cisco advanced as the world's largest equipment maker estimated revenue in the quarter ending July that missed analysts' expectations.
Gentiva Health Services jumped after Kindred Healthcare offer to buy the company for about $1.6bn.
The US 10-year bond yield was down four basis points at 2.50%.
West Texas Intermediate crude futures fell 0.56% to $101.80 per barrel, according to the ICE.