The major U.S. index futures are presently indicating a modestly higher opening on Friday, suggesting that stocks may recover some of the losses incurred during the prior session’s sell-off. The futures indicated ongoing weakness on market but recovered after the release of the Labor Department’s much-anticipated report on consumer price inflation for January. The report indicated that consumer prices increased by marginally less than forecasted on a monthly basis, whereas the annual growth rate decelerated by a greater margin than expected. The Labor Department reported that its consumer price index increased by 0.2 percent in January, following a rise of 0.3 percent in December. Analysts had anticipated an increase in prices by an additional 0.3 percent. The annual rate of growth in consumer prices decelerated to 2.4 percent in January, down from 2.7 percent in December, and fell short of the anticipated 2.5 percent.
In the meantime, the Labor Department reported that core consumer prices, excluding food and energy, rose by 0.3 percent in January, following a 0.2 percent increase in December, aligning with expectations. The annual growth rate of core consumer prices decreased to 2.5 percent in January, down from 2.6 percent in December, aligning with expectations. The less alarming headline inflation data could foster a resurgence of optimism regarding the trajectory of interest rates. “This print strengthens the case that the Federal Reserve can maintain a gradual easing bias without fearing renewed inflation pressure,” stated Daniela Hathorn. She noted, “Importantly, while the labor market remains resilient, today’s CPI reduces the risk that strong employment data forces the Fed into a hawkish rethink.” Following a Wednesday trading session characterized by volatility and a slight decline, stocks experienced a more pronounced downturn during Thursday’s trading activities. The major averages, once more, could not maintain an initial upward trajectory and experienced a significant decline as the day unfolded.
The major averages experienced additional declines as the day progressed, ultimately closing close to their session lows. The Nasdaq experienced a decline of 469.32 points, representing a decrease of 2.0 percent, closing at 22,597.15. The S&P 500 fell by 108.71 points, or 1.6 percent, to finish at 6,832.76. Meanwhile, the Dow dropped 669.42 points, equivalent to a 1.3 percent decrease, ending at 49,451.98. The sell-off on market was partially linked to apprehensions regarding the effects of the artificial intelligence expansion on sectors beyond the technology industry. Worries regarding the potential effects of AI on the revenues and profit margins of firms in the financial, transportation, logistics, and commercial real estate sectors have led to significant selling pressure. Renewed weakness among tech stocks also weighed on market amid a steep drop by shares of Cisco Systems. Cisco experienced a significant decline of 12.3 percent following the release of its fiscal second quarter results, which surpassed expectations, yet the company issued guidance for the current quarter that fell short of market anticipations. In part due to the significant decline of Cisco, the NYSE Arca Networking Index experienced a drop of 3.0 percent for the day.
Gold stocks experienced significant weakness as the price of the precious metal declined sharply, resulting in a 6.9 percent decrease in the NYSE Arca Gold Bugs Index. Transportation stocks exhibited notable weakness amid concerns surrounding AI, as evidenced by a 4.0 percent decline in the Dow Jones Transportation Index. Financial, steel, and energy stocks experienced notable weakness, whereas interest rate-sensitive telecom and utilities stocks defied the downward trend in light of a significant decline in treasury yields. On the U.S. economic front, the Labor Department released a report indicating that first-time claims for unemployment benefits in the U.S. decreased, albeit by a smaller margin than anticipated, last week. According to the report, initial jobless claims decreased to 227,000, reflecting a reduction of 5,000 from the prior week’s adjusted figure of 232,000. Analysts had anticipated a decline in jobless claims to 220,000, down from the initially reported figure of 231,000 for the prior week. A report indicating that existing home sales declined significantly more than anticipated in January.