All three major US stock indexes ended the session deep in the red following the Labour Department’s April consumer prices report. — Reuters picWASHINGTON, May 13 — Wall Street closed lower on Wednesday with the S&P suffering its biggest one-day percentage drop since February, as inflation data fueled concerns over whether interest rate hikes from the Fed could happen sooner than anticipated.
But pent-up demand from consumers flush with stimulus and savings is colliding with a supply drought, sending commodity prices spiking, while a labor shortage drives wages higher. Core consumer prices , which exclude volatile food and energy items, grew at 3 per cent year-on-year, shooting above the central bank’s average annual 2 per cent inflation growth target.
“The CPI number being stronger than expected has led to further weakness in tech stocks,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. “Tech investors are concerned that higher rates are going to lead to multiple compression and less attractive valuations for tech names in a higher rate environment.”