That dip follows a week of losses on Wall Street just as investors fear the Federal Reserve might not be as aggressive as anticipated in lowering interest rates after economic data last week amplified their concerns.
Focus now on financial stocks: Capital One Financial plans to buy Discover Financial Services for an all-stock deal of $35.3 billion. Capital One fell 6.4 percent in premarket trading, while Discover jumped 12.2 percent.
Meanwhile, Home Depot beat profit expectations but missed sales, and its shares slipped 1.8% after the bell. Earnings reports after the bell Tuesday include Walmart and Palo Alto Networks.
Wall Street ended a five-week winning streak as all the major indexes pulled back. The biggest decliner was the Nasdaq Composite, which fell more than 1.3 percent, followed by the S&P 500, which slipped about 0.4 percent. The Dow Jones Industrial Average took the slightest hit, falling around 0.1 percent.
The threat of reawakened inflation was only amplified the next day when data showed a sharp rise of 0.8 percent for the producer price index, calculating wholesale prices for January. This followed a consumer price index of 3.1 percent over a year earlier, considerably bettering expectations and well above the Fed’s 2 percent target rate.
Bill Adams, Chief Economist at Comerica Bank, said that The inflation report for January will matter to the Fed. He added that the price pressure built up over the past couple of years is still working through many sectors of the economy, and this data will likely justify the Fed moving towards a restricted rate stance throughout 2024.
Source: Alex Harring,CNBC February 20, 2024
