Stocks tumble as red-hot inflation print pressures tech shares

U.S. stocks opened lower on Thursday as Wall Street weighed another decades-high inflation print for clues on how aggressively the Federal Reserve will adjust monetary conditions to rein in surging prices.

The tech-heavy Nasdaq Composite shed 294 points, or 1.96% following the fresh CPI report that reflected a 7.5% annual gain in January, the fastest rise since 1982. The Dow Jones Industrial Average erased 250 points, falling 0.70% lower, while the S&P 500 dipped 1.29%. Meanwhile the closely-watched 10-year Treasury note jumped near 2%.

“Even though we see the yield curve start flattening, we are watching the 10-year very closely and the CPI number,” ERShares chief operating officer and chief investment strategist Eva Ados told Yahoo Finance Live on Wednesday, adding the three factors to monitor in the data are costs associated with labor, food prices, and energy.

“The 10-year is approaching 2%,” Ados said. “Once that happens, that will trigger a psychological level and more anxiety in markets.”

In the previous session, Wall Street’s main benchmarks were lifted by an influx of strong corporate earnings. The Walt Disney Company (DIS), a component of the Dow, unveiled first quarter 2022 results after the bell on Wednesday that sharply beat estimates. Better than expected growth for the entertainment giant’s streaming service Disney+ and a recovery in theme park attendance sent shares up as much as 9% after the report. Uber (UBER) also posted results after market close, revealing quarterly revenue that topped analyst forecasts and indicated headwinds caused by the Omicron COVID surge have eased.

In Wednesday’s main session, Chipotle Mexican Grill’s (CMG) was in the spotlight when shares popped after the fast-casual restaurant chain posted a quarterly earnings beat and saw margins expand, despite concerns over food price inflation and labor costs.

“Last year, it was all about ‘tell me the story and how great it is,’ while this year, it’s ‘show me the money and show me that you’re growing profitably — that you have cash flow,’” Satori Fund founder and portfolio manager Dan Niles told Yahoo Finance Live.

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After a surprise shift by the Federal Reserve on how aggressively it would tighten monetary conditions rocked equities in January, investors have found relief in strong earnings over recent weeks. Bank of America said in its latest update that S&P 500 earnings per share (EPS) are exceeding consensus expectations by 6% so far for the latest quarter and tracking toward a growth rate of well over 20% on a year-over-year basis.

But as earnings season winds down, investors will turn their attention to macroeconomic concerns. On Thursday, sights will be set on the January Consumer Price Index (CPI), expected to show a fresh 39-year high rate of inflation.

“We do think the focus shifts back to the macro side of the ledger this week,” Stuart Kaiser, UBS head of equity derivatives research, told Yahoo Finance Live on Tuesday, adding the European Central Bank and Bank of England are tightening monetary policy along with the Fed and a series of high inflation prints are expected in coming months. “When we put that all together, we don’t think the bumpy ride is over.”

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9:30 a.m. ET: US stocks falter as Wall Street weighs decades-high CPI print

Here were the main moves in markets at the start of Thursday’s session:

• S&P 500 (^GSPC): -54.84 (-1.20%) to 4,532.34

• Dow (^DJI): -262.99 (-0.74%) to 35,505.07

• Nasdaq (^IXIC): -258.68 (-1.79%) to 14,231.69

• Crude (CL=F): -$0.22 (-0.25%) to $89.44 a barrel

• Gold (GC=F): -$7.50 (-0.41%) to $1,829.10 per ounce

• 10-year Treasury (^TNX): +5.3 bps to yield 1.9820%

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8:55 a.m. ET: Stock futures tumble after red-hot inflation data

Here’s how stock futures fared as investors mulled the latest CPI report

• S&P 500 futures (ES=F): -37.75 points (-0.82%), to 4,540.00

• Dow futures (YM=F): -139 points (-0.39%), to 35,502.00

• Nasdaq futures (NQ=F): -192.00 points (-0.28%) to 14,846.25

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8:30 a.m. ET: Inflation reaches fresh 40-year high

U.S. inflation accelerated in January, with prices across a wide range of goods and services soaring further amid lingering shortages and supply chain disruptions.

The Consumer Price Index (CPI) released by the Bureau of Labor Statistics Thursday morning registered a 7.5% annual gain in January. Consensus economists were looking for a 7.3% rise, according to Bloomberg data. This represented the fastest rise since 1982, as well as an acceleration from the 7.0% year-over-year increase seen in December.

Energy prices remained a key contributor to the overall CPI and were up by 27% on a year-over-year basis in January. Within energy, fuel oil prices jumped 9.5% on a monthly basis, tracking the rise in crude oil prices, which rallied to a seven-year high at the beginning of the year. Electricity prices also jumped by a pronounced 4.2% on a month-over-month basis.

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8:30: a.m. ET: Jobless claims decline as Omicron labor market disruptions ease

First-time unemployment filings came in lower in the latest weekly data, continuing a recent downward trend in jobless claims as Omicron-related pressures on the labor market begin to abate. Another 223,000 Americans filed new claims for the week ended Feb. 5, below expectations of 230,000.

Filings for unemployment insurance have fallen consistently in recent weeks after a temporary surge in mid-January to a print of nearly 300,000, the highest level since October. The rush of U.S. workers applying for benefits was attributed to disruptions from the Omicron variant of COVID-19 and adjusted workforces following the seasonal hiring increase at the end of 2021.

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7:00 a.m. ET: Contracts on Wall Street’s main benchmarks flat ahead of CPI print

Here were the main moves in futures trading ahead of Thursday’s open

• S&P 500 futures (ES=F): -72.50 points (-0.16%), to 4,570.50

• Dow futures (YM=F): +32.00 points (+0.09%), to 35,673.00

• Nasdaq futures (NQ=F): -43.75 points (-0.29%) to 14,994.50

• Crude (CL=F): +$0.96 (+1.07%) to $90.62 a barrel

• Gold (GC=F): -$3.00 (-0.16%) to $1,833.60 per ounce

• 10-year Treasury (^TNX): -0.00 bps to yield 1.9290%

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6:00 p.m. ET Wednesday: Stock futures rise slightly ahead of key inflation data

Here’s how the key indexes fared in post-market trading Wednesday:

• S&P 500 futures (ES=F): +4.00 points (+0.09%), to 4,581.75

• Dow futures (YM=F): +78.00 points (+0.22%), to 35,719.00

• Nasdaq futures (NQ=F): +15.50 points (+0.10%) to 15,038.25

• Crude (CL=F): +$0.31 (+0.35%) to $89.97 a barrel

• Gold (GC=F): +$2.60 (+0.14%) to $1,833.60 per ounce

• 10-year Treasury (^TNX): -2.5 bps to yield 1.9290%

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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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