U.S. Stocks Seeing Continued Weakness Amid Inflation Worries

(RTTNews) - Stocks have moved mostly lower over the course of the trading day on Wednesday, extending the pullback seen in the previous session. The major averages attempted to recover from an initial drop but have moved back to the downside since then.

Currently, the major averages are all in negative territory, although the tech-heavy Nasdaq is underperforming its counterparts. While the Nasdaq is down 128.09 points or 0.8 percent at 15,758.45, the Dow is down 108.89 points or 0.3 percent at 36,211.09 and the S&P 500 is down 18.92 points or 0.4 percent at 4,666.33.

Concerns about the impact of elevated inflation are contributing to the weakness on Wall Street after the Labor Department released a report showing a bigger than expected increase in U.S. consumer prices in the month of October.

The report said the consumer price index jumped by 0.9 percent in October after rising by 0.4 percent in September. Economists had expected consumer prices to climb by 0.6 percent.

Excluding higher prices for food and energy, core consumer prices still increased by 0.6 percent in October after inching up by 0.2 percent in September. Core prices were expected to rise by 0.4 percent.

The Labor Department also said the annual rate of growth in consumer prices accelerated to 6.2 percent in October from 5.4 percent in September, reaching the highest level since November of 1990.

The annual rate of growth in core prices also accelerated to 4.6 percent from 4.0 percent, reflecting the biggest jump in prices since August of 1991.

The acceleration in the rate of consumer price inflation has raised concerns about the outlook for interest rates even though the Federal Reserve has signaled it will not be in a hurry to begin raising rates.

Profit taking may also be contributing to the extended pullback, as some traders cash in on stocks' recent run to record highs.

Meanwhile, a separate report released by the Labor Department showed another modest decrease in first-time claims for U.S. unemployment benefits in the week ended November 6th.

The report said initial jobless claims edged down to 267,000, a decrease of 4,000 from the previous week's revised level of 271,000.

Economists had expected jobless claims to dip to 265,000 from the 269,000 originally reported for the previous week.

Jobless claims decreased for the sixth consecutive week, once again falling to their lowest level since hitting 256,000 in the week ended March 14, 2020.

Sector News

Energy stocks continue to turn in some of market's worst performances on the day amid a steep drop by the price of crude oil. Crude for December delivery is plunging $2.50 to $81.64 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 3.9 percent, the NYSE Arca Oil Index is down by 2.2 percent and the NYSE Arca Natural Gas Index is down by 1.7 percent.

Significant weakness has also emerged among semiconductor stocks, as reflected by the1.8 percent drop by the Philadelphia Semiconductor Index. The index continues to give back ground after reaching a record intraday high in early trading on Tuesday.

Steel, software and housing stocks are also seeing notable weakness in afternoon trading, while gold stocks are moving sharply higher along with the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index slid by 0.6 percent, while China's Shanghai Composite Index fell by 0.4 percent.

Meanwhile, the major European markets moved to the upside on the day. While the U.K.'s FTSE 100 Index advanced by 0.9 percent, the German DAX Index edged up by 0.2 percent and the French CAC 40 Index closed just above the unchanged line.

In the bond market, treasuries have moved sharply lower following the consumer price inflation data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 11.2 basis points at 1.544 percent.