Wall Street: Dow Jones tumbles 431 points as inflation fears reignite

NEW YORK, New York — A higher-than-expected PPI (Producer Price Index) reading on Thursday dented enthusiasm for buying stocks.The PPI for January was expected to come in at 0.4 percent, but came in at 0.7 percent. With the higher CPI number revealed on Wednesday investors are now worrying again about inflation,

"Both inflation readings this week point to the stickiness of inflation and that the fight isn’t over, especially when considering today’s PPI reading was the highest month-over-month increase since early summer," said Mike Loewengart, head of model portfolio construction at Morgan Stanley told CNBC Thursday.

"It shouldn’t be a surprise to see the market take a breather as hopes of a dovish Fed in the coming months fade," he added. "Bottom line is investors should recognize inflation may not return to normal levels as quick as many hope, and with that may come more volatility."

The Labor Department also reported Thursday a drop in initial jobless claims flor the week to 11 February 2023.

Stocks were weak throughout the day, with losses accelerating towards the close. The Nasdaq Composite shed 214.76 points or 1.78 percent to 11,855.83.

The Dow Jones industrials tumbled 431.20 points or 1.26 percent to 33,696.85.

The Standard and Poor’s 500 dropped 57.19 points or 1.38 percent to 4,090.41.

On foreign exchange markets, the euro weakened against the U.S. dollar, with the exchange rate closing at 1.0674. This represents a decline of 0.11 percent, or 0.00119.

The Japanese yen improved slightly to finish the U.S. trading session around 133.85, a gain of 0.22 percent.

The dollar strengthened against the Canadian dollar, with the exchange rate falling to 1.3456.

The British pound lost ground, retreating to 1.1992. This represents a decline of 0.25 percent, or 0.00301.

The Swiss franc was slightly lower at 0.9256.

The Australian dollar by 0.33 percent to 0.6880. T

The New Zealand dollar weakened sharply to 0.6257.

On Thursday, global stock markets closed with mixed results. The ESTX 50 PR.EUR and Euronext 100 Index in Europe rose by 0.40 percent and 0.52 percent, respectively.

The FTSE 100 in the UK gained 0.18 percent to close at 8,012.53, while Germany’s DAX and France’s CAC 40 increased by 0.18 percent and 0.89 percent, respectively.

Some Asian markets also performed well, with Japan’s Nikkei 225 rising 0.71 percent and Hong Kong’s Hang Seng Index climbing 0.84 percent. However, China’s SSE Composite Index and Shenzhen Index both fell by 0.96 percent and 1.30 percent, respectively.

Meanwhile, the STI Index increased by 0.93 percent, while Australia’s S&P/ASX 200 and All Ordinaries indices also saw gains of 0.79 percent and 0.81 percent, respectively. Across the Tasman, New Zealand’s S&P/NZX 50 had a good day, climbing 74.63 points or 0.62 percent to close Thursday at 12,157.75.

In Southeast Asia, the IDX Composite in Indonesia and FTSE Bursa Malaysia KLCI in Malaysia declined by 0.27 percent and 0.26 percent, respectively. On the other hand, in the Asia Pacific, South Korea’s KOSPI Composite Index and TSEC weighted index in Taiwan saw gains of 1.96 percent and 0.76 percent, respectively.

In other regions, the MOEX Russia Index and BEL 20 in Europe both had losses of 0.19 percent and 0.07 percent, respectively.