U.S. Stocks May Come Under Pressure On Hotter-Than-Expected Inflation Data

After ending yesterday’s wild rise mostly higher, stocks are likely to move back to the downside in early trading on Friday. The major index futures are currently pointing to a sharply lower open for the markets, with the S&P 500 futures down by 1.2 percent.

The futures came under pressure following the release of a report from the Commerce Department showing an unexpected acceleration in the annual rate of growth by core consumer prices, which exclude food and energy prices.

The Commerce Department’s reading on core consumer prices, which is said to be preferred by the Federal Reserve, showed the annual rate of growth accelerated to 4.7 percent in January from an upwardly revised 4.6 percent in December.

Economists had expected the annual rate of growth by core consumer prices to slow to 4.3 percent from the 4.4 percent originally reported for the previous month.

The unexpected acceleration in core consumer price growth is likely to add to recent concerns about the outlook for interest rates.

The data may convince the Fed that it needs to raise rates higher than currently anticipated in order to win the battle against elevated inflation.

The Commerce Department also said personal income climbed by 0.6 percent in January after rising by an upwardly revised 0.3 percent in December.

Economists had expected personal income to advance by 0.9 percent compared to the 0.2 percent uptick originally reported for the previous month.

Meanwhile, the report said personal spending surged by 1.8 percent in January after edging down by a revised 0.1 percent in December.

Personal spending was expected to jump by 1.3 percent compared to the 0.2 percent dip originally reported for the previous month.

Not long after the start of trading, the Commerce Department is scheduled to release its report on new home sales in the month of January. Economists expect new home sales to rise to an annual rate of 620,000 in January from 616,000 in December.

The University of Michigan is also due to release its revised reading on consumer sentiment in the month of February. The consumer sentiment index is expected to be unrevised at 66.4.

Stocks went on a roller coaster ride during trading on Thursday, with the major averages swinging back and forth across the unchanged line after ending Wednesday’s trading narrowly mixed.

After seeing initial strength, the major averages turned lower over the course of morning trading before recovering in the afternoon.

The major averages all eventually ended the day in positive territory. The Dow rose 108.82 points or 0.3 percent to 33,153.91, the Nasdaq advanced 83.33 points or 0.7 percent to 11,590.40 and the S&P 500 climbed 21.27 points or 0.5 percent to 4,012.32.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance on Friday. Japan’s Nikkei 225 Index jumped 1.3 percent following the holiday on Thursday, while Hong Kong’s Hang Seng Index tumbled by 1.7 percent.

The major European markets have also turned mixed on the day. While the U.K.’s FTSE 100 Index is up by 0.2 percent, the French CAC 40 Index is down by 0.4 percent and the German DAX Index is down by 0.6 percent.

In commodities trading, crude oil futures are inching up $0.23 to $75.62 a barrel after jumping $1.44 to $75.39 a barrel on Thursday. Meanwhile, after falling $14.70 to $1,826.80 an ounce in the previous session, gold futures are slipping $3.90 to $1,822.90 an ounce.

On the currency front, the U.S. dollar is trading at 135.85 yen versus the 134.70 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0550 compared to yesterday’s $1.0596.

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