After a strong January, equity markets have pulled back this month as a series of economic data have fueled fears that the US central bank may keep interest rates high for longer, against a backdrop of signs of inflation. rigid and a resilient labor market.
Data on Friday showed the personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, soared 0.6% last month, after rising 0.2% in December.
Consumer spending, which accounts for more than two-thirds of US economic activity, rose 1.8% last month.the Commerce Department reported. Economists polled by Reuters had expected 1.3%.
“The headline and core PCE numbers were well above expectations. What concerns us most is that the data since the last Fed meeting has been extremely strong,” said Gene Goldman, chief investment officer at Cetera Investment Management.
“If the Fed had had this data at the last meeting, it probably would have gone up 50 basis points and the tone of the press conference would have been very different,” he added.
Cleveland Fed President Loretta Mester said the Fed should raise interest rates more than necessary if necessary to fully control inflation.
According to preliminary closing data, the Dow Jones Industrial Average fell 1% to 32,818.44, while the S&P 500 lost 1% to end at 3,970.42. The Nasdaq Composite fell 1.7% to 11,394.88 units.
Most of the major S&P sectors fell, with technology and consumer discretionary leading the losses. Communication services suffered a sixth consecutive loss, its worst streak since a similar six sessions in August.
Mega-cap stocks such as Tesla Inc , Amazon.com Inc and Nvidia Corp fell as US Treasury yields rose.
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