U.S. Stocks Move To The Downside Amid Renewed Inflation Concerns

After moving to the downside early in the session, stocks have fluctuated over the course of the trading day on Friday but largely maintained a negative bias.

The Nasdaq and the S&P 500 are adding to the losses posted in yesterday’s session, when they recovered from an early sell-off but still ended the day in the red.

Currently, the major averages are firmly in negative territory. The Dow is down 286.73 points or 0.6 percent at 48,784.83, the Nasdaq is down 116.43 points or 0.5 percent at 23,568.69 and the S&P 500 is down 26.59 points or 0.4 percent at 6,942.42.

The weakness on Wall Street may partly reflect renewed concerns about inflation after the Labor Department released a report showing producer prices increased by much more than expected in the month of December.

The Labor Department said its producer price index for final demand climbed by 0.5 percent in December after rising by 0.2 percent in November. Economists had expected producer prices to rise by another 0.2 percent.

The report also said producer prices in December were up by 3.0 percent compared to the same month a year ago, unchanged from November. The annual rate of growth was expected to slow to 2.7 percent.

New tariff threats from President Donald Trump may also be contributing to the negative sentiment, with the president threatening Canada with a 50 percent tariff on all aircraft sold in the U.S. over its refusal to certify certain Gulfstream jets.

Trump also signed an executive order that would impose tariffs on any goods from countries that sell or provide oil to Cuba.

Additionally, shares of Apple (AAPL) have slumped by 1.2 percent even though the tech giant reported better than expected fiscal first quarter results.

Meanwhile, traders are also reacting to news that Trump announced his intent to nominate former Federal Reserve Governor Kevin Warsh to succeed Fed Chair Jerome Powell.

“While the markets are probably relieved that a well-known, former Fed official has been nominated as the next Fed chair, they are also likely to pivot to concerns that he won’t be as dovish as they were expecting the new chair to be,” said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.

Sector News

Gold stocks are turning in some of the market’s worst performances on the day amid a nosedive by the price of the precious metal, dragging the NYSE Arca Gold Bugs Index down by 7.8 percent.

Significant weakness is also visible among housing stocks, as reflected by the 2.5 percent slump by the Philadelphia Housing Sector Index.

Biotechnology, airline and semiconductor stocks are also seeing considerable weakness, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Friday. Japan’s Nikkei 225 Index edged down by 0.1 percent, China’s Shanghai Composite Index slumped by 1 percent and Hong Kong’s Hang Seng Index tumbled by 2.1 percent.

Meanwhile, the major European markets have moved to the upside on the day. While the German DAX Index is up by 1.1 percent, the French CAC 40 Index is up by 0.9 percent and the U.K.’s FTSE 100 Index is up by 0.4 percent.

In the bond market, treasuries are giving back ground following the rebound seen on Thursday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.8 basis points at 4.245 percent.

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