Inflation worries push markets lower
Wall Street slid lower Thursday, with inflation concerns and a disappointing earnings report from Viacom Inc. prompting investors to collect profits. A drop in oil prices failed to mitigate the losses.
Investors grew jittery as the latest unemployment figures showed strength in the labor market. First-time jobless claims fell by 20,000 from the previous week to 278,000 — a far sharper drop than economists had expected.
While a strong labor market is generally good news, Wall Street remains concerned that the additional buying power that comes with steady employment could push prices higher and spark inflation, prompting the Federal Reserve to keep hiking interest rates.
Still, investors were pleased with a drop in oil prices, which fell below $60 per barrel at one point after the Energy Department reported a rise in crude oil stockpiles. A barrel of light crude settled at $60.54, down 47 cents, on the New York Mercantile Exchange.
“Certainly the move in oil is good, and the market certainly perked up somewhat after that inventory report,” said Peter Cardillo, chief strategist and senior vice president at S.W. Bach & Co. “For the intermediate term, there doesn’t seem to be a supply/demand problem out there. But you don’t know when that’ll change.”
The Dow Jones industrial average fell 67.95, or 0.61 percent, to 11,069.22.
Broader stock indicators also fell. The Standard & Poor’s 500 index lost 4.88, or 0.38 percent, to 1,287.79, and the Nasdaq composite index dropped 3.85, or 0.17 percent, to 2,279.32.
Bonds fell, with the yield on the 10-year Treasury note climbing to 4.56 percent from 4.53 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices rose.
Stocks jumped to fresh 4 1/2 -year highs over the past few weeks as strength in the economy encouraged investors. Yet concerns remain, including whether the Federal Reserve’s interest rate hikes will cut off economic growth. With little news Thursday to keep momentum alive, profit-taking ate into the rally.
Declining issues outnumbered advancers by more than 9 to 7 on the New York Stock Exchange, where preliminary consolidated volume came to 2.17 billion shares, compared with 2.25 billion at the same point on Wednesday.
The Russell 2000 index of smaller companies fell 1.08, or 0.15 percent, to 732.45.
Overseas, Japan’s Nikkei stock average surged 1.99 percent. In Europe, Britain’s FTSE 100 was down 0.62 percent, France’s CAC-40 lost 0.02 percent for the session, and Germany’s DAX index fell 0.07 percent.