Stock Market Sinks After Inflation Hits 40-Year High

The U.S. stock market resumed its meltdown Thursday after the consumer price index showed the highest inflation since 1982.

The main stock indexes today gapped down at the open, a day after posting strong gains.

The Nasdaq composite lost 1.4%, the S&P 500 0.8% and the Dow Jones Industrial Average 0.5%.

Volume fell on the NYSE and Nasdaq compared with the same time on Wednesday. Declining stocks led advancers by a 2-to-1 ratio on the NYSE and by 5-to-2 on the Nasdaq.

Amazon.com (AMZN) gapped up and rallied 4.4% after the online retailer and cloud tech company announced a 20-for-1 stock split and authorized a $10 billion stock buyback. Amazon stock will start reflecting the split on June 6.

Major Stocks Mainly Lower

But other major stocks fell. Apple (AAPL) and Microsoft (MSFT) fell about 2% each. Alphabet (GOOGL) lost 1.4%. Invesco QQQ Trust (QQQ) slid 1.7%.

CrowdStrike Holdings (CRWD) soared more than 13% in early trading after the cybersecurity company’s January-quarter profit and revenue easily beat estimates. The company’s fiscal 2023 guidance was well above expectations, too. CrowdStrike shares climbed above the 50-day moving average but still have a lot of repair to do.

Fossil Group (FOSL) plunged 28%, breaking below the 50-day moving average, in huge volume. The maker of personal accessories, whose brands include Armani Exchange and Michael Kors, reported a 237% rise in adjusted earnings to 64 cents a share. Sales increased 14% to $604.2 million. Fossil forecast worldwide net sales growth of 2% to 6%, with stronger growth coming in the second half of the year.

The Innovator IBD 50 ETF (FFTY) fell 0.5%. Broadcom (AVGO) and Shockwave Medical (SWAV) fell more than 3% each, although their chart patterns weren’t changed much.

LSB Industries (LXU), a new IBD 50 company, led with a 14% jump to new highs. It is well extended. The company makes fertilizers and chemicals for mining and industrial customers.

Inflation Report Rattles Stock Market

The Labor Department said the CPI rose 0.8% in February from the prior month. It jumped 7.9% vs. a year ago, the biggest annual gain since January 1982. The core CPI, which removes food and energy prices, rose 0.5% from January and 6.4% from a year ago. That’s the highest since August 1982.

The inflation numbers were in line with forecasts, although overall consumer inflation came in above the consensus estimate for a 0.7% monthly increase.

Brian Coulton, chief economist at Fitch, said there was some positive news in the slowdown in core goods inflation (i.e., goods excluding energy) to 0.4% month on month from 1% in January.

“But underlying inflation pressures continue to broaden as housing rentals accelerate — at 4.7% (year over year), rental inflation is the highest since 1991. And of course the energy and food shock is intensifying due to the Russia-Ukraine war,” Coulton said in a commentary.

In Ukraine, Russian forces increased attacks on the southern city of Mariupol, where civilians are struggling to evacuate. Mariupol has been shelled for 10 straight days.

Gasoline costs jumped 6.6% in February, accounting for almost a third of the main CPI increase, said BMO Capital Markets economist Sal Guatieri. Fuel costs are already up around 20% so far in March from February.

The price of U.S. crude oil jumped 5.2% to $114.36 a barrel. Oil sold off about 12% Wednesday after ramping up the previous six days in what was starting to look like a climax run.

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