US stocks down as hopes for early rate cut dashed
Wall Street stocks retreated on Friday after a bigger than expected increase in wholesale prices poured cold water on hopes that the Federal Reserve would cut interest rates soon. The Dow Jones ended 0.4 percent down at 38,627, while the S&P 500 lost 0.5 percent to 5,005. The Nasdaq dropped 0.8 percent at 15,775. The slide came after US wholesale prices increased more than anticipated, gaining 0.3 percent in January on higher services costs. "Inflation concerns continued to drive Fed rate cut expectations lower and Treasury yields higher ahead of the weekend as import prices and the latest (Producer Price Index) release both came in quite hot," said Oxford Economics lead analyst John Canavan in a note. While Oxford Economics expects that the wholesale inflation data is unlikely to change the Fed's planned path for rate cuts this year, it added in a separate report that those calling for a quick drop in rates will probably be disappointed. US Treasury yields, which can act as a proxy for interest rate expectations, rose on Friday. The 10-year Treasury yield rose to around 4.3 percent, while the two-year yield exceeded 4.6 percent. On Tuesday, stocks fell sharply after data showed that consumer inflation remained higher than hoped. But they bounced back in the last two days. Among individual companies, Coinbase added 8.8 percent after reporting a US$273 million profit in the fourth quarter, up from a US$557 million loss in the year-ago period. Sports giant Nike closed the day 2.4 percent lower on plans to trim two percent of its workforce as part of a cost-cutting drive. (AFP)