US Stocks Down As Inflation Cements Rate Hike Bets

Wall Street's main indexes fell in early trading on Thursday, with technology stocks leading the declines, after data showed US consumer prices surged in February, cementing the case for an interest rate hike by the Federal Reserve later this month.

The Labour Department's report showed consumer prices shot up 7.9 percent year-on-year, the sharpest annual spike in 40 years.

While the numbers matched economists' expectations, investor fears are rife that inflation will accelerate further in the coming months as Russia's military actions in Ukraine drive up the costs of oil and other commodities.

Nine of the 11 major S&P sectors declined, with technology stocks falling the most, 1.9 percent, after leading a Wall Street rally in the previous session. Chipmakers fell 2.2 percent. Energy shares rose 1.2 percent after taking a breather on Wednesday. Big banks fell, with Citigroup down 2.1 percent.

"Bottom line is inflation is elevated and there's more to come," said Peter Cardillo, chief market economist at Spartan Capital Securities. "I was looking for inflation to peak in the second quarter but now that depends on oil. Perhaps we won't see any relief until the end of the year."

Fed Chair Jerome Powell last week said he would back a quarter point rate increase when the US central bank meets next week and would be "prepared to move more aggressively" later if inflation does not abate as fast as expected.

Traders now see a 95 percent probability of a 25-basis-point hike by the Fed in its March meeting.

At 09:55 US Eastern Time, the Dow Jones Industrial Average was down 0.74 percent, at 33,040, the S&P 500 was down 0.92 percent, at 4,238, and the Nasdaq Composite was down 1.44 percent, at 13,065.

Megacap growth stocks Microsoft, Meta Platforms and Tesla all slipped more than 1 percent, while Nvidia and Apple dropped over 2.5 percent each.

Shares of Amazon.com jumped 4.8 percent after its board approved a 20-for-1 split of the e-commerce giant's common stock and authorized a US$10 billion buyback plan. (Reuters)