Inflation Fears Reignite as PPI Surprises: Tech Stocks Tumble and Fed Decision Looms

Stock Market Retreats as Inflation Data Surpasses Expectations

U.S. stock markets closed lower on Thursday as higher-than-anticipated inflation data dampened investor sentiment. The Producer Price Index (PPI) for November showed a 0.4% increase, exceeding the consensus estimate of 0.2%, which led to a sell-off in major indexes.

Tech stocks bore the brunt of the downturn, with industry giants like Nvidia and Adobe experiencing significant declines. Nvidia shares dropped over 1%, while Adobe plummeted nearly 14% following a disappointing revenue outlook. Other tech behemoths, including Alphabet, Meta, and Amazon, also saw their stock prices fall.

At the closing bell, the S&P 500 settled at 6,051.25, down 0.54%. The Dow Jones Industrial Average ended the session at 43,914.12, registering a 0.53% decrease. The Nasdaq composite, retreating from its recent record high, closed at 19,902.84, down 0.66%.

The unexpected inflation figures prompted a rise in bond yields, with the 10-year Treasury yield climbing six basis points to 4.332%. The PPI report indicated a 3% annual wholesale inflation rate, while core PPI rose 0.2%. This data, coupled with the Consumer Price Index showing a 2.7% year-over-year increase in November, suggests that the Federal Reserve may consider a rate cut in its upcoming meeting.

In other economic news, jobless claims rose to 242,000, surpassing forecasts and reaching a recent high. This development adds another layer of complexity to the current economic landscape.

The commodities market also felt the impact of the day’s events. West Texas Intermediate crude oil fell to $70.50 per barrel, while Brent crude remained relatively stable at $73.52. Gold prices experienced a sharp decline of almost 2%, settling at $2,704.50. In the cryptocurrency sphere, Bitcoin decreased by 1.27%, trading at $99,760.

As markets digest these developments, investors remain cautious about potential economic headwinds and eagerly await further guidance from the Federal Reserve on monetary policy.