During Thursday's trading session, stocks, after showing initial indecisiveness, trended mostly lower leading most of the major averages into negative territory. These trends emerged due to renewed concerns about potential delays to the Federal Reserve's first interest rate hike, following the announcement of higher-than-anticipated inflation.
At this moment, the Dow is down 154.03 points or 0.4 percent at 38,889.29, Nasdaq is down 50.34 points or 0.3 percent at 16,127.43, and the S&P 500 is down 19.81 points or 0.4 percent at 5,145.50.
The Labor Department's report revealed that producer prices rose significantly higher than expected in February, with the producer price index for final demand climbing by 0.6 percent, compared with a 0.3 percent rise in January. Notably, the year-on-year rate of producer price growth accelerated to 1.6 percent in February from a revised 1.0 percent in January, surpassing the estimated rise to 1.1 percent.
Commenting on the situation, Danni Hewson, Head of Financial Analysis at AJ Bell, said markets are grappling with the expectation that the Fed's policy change will be a lengthy and complex process. Markets had generally overlooked last week's high inflation data, but the producer price figures have pushed investors to reassess the "Goldilocks" scenario.
In other economic data, the Commerce Department reported a rebound in retail sales in February, although it was below forecasts. Retail sales rose by 0.6 percent in February, after a revised fall of 1.1 percent in January. Excluding sales by motor vehicle and parts dealers, retail sales rose by 0.3 percent in February.
Responding to the inflation news, FHN Financial's chief economist remarked that when the Fed is considering rate cuts and is faced with slower economic growth and brisker inflation, they prioritize the latest inflation data.
This uncertainty has particularly affected the housing sector, with stocks showing a significant downturn. Telecom and commercial real estate stocks, which are sensitive to interest rates, have also come under pressure. Meanwhile, oil service and software stocks are resisting the downward trend.
Looking to global markets, Asia-Pacific region had a mixed performance on Thursday with Japan's Nikkei 225 Index climbing by 0.3 percent, while China's Shanghai Composite Index fell by 0.2 percent and Hong Kong's Hang Seng Index slid by 0.7 percent. Major European markets were also mixed.
The bond market reacted to the inflation data with a sharp decline, leading to a 10.2 basis points increase in the yield on the benchmark ten-year note to 4.294 percent.
