Wall Street Set To Slide After Hot CPI Data

Wall Street's main indexes were set to open sharply lower on Thursday after stronger-than-expected consumer prices data raised concerns that the Federal Reserve will act aggressively to counter inflation.

The figures from the Labor Department showed that consumer prices leapt 7.5% in January on a year-over-year basis, topping economists' estimate of 7.3%, and leading to the biggest annual increase in inflation in 40 years.

Traders are now betting the Fed will begin raising rates at its March meeting, with money markets pointing to 50% odds of a half point increase next month, from 30% before the release of the data. [MMT/]

"CPI came in a bit on the high side, and it doesn't suggest inflation is peaking anytime soon. It might mean the Fed could get more aggressive," said Peter Cardillo, chief market economist at Spartan Capital Securities.

Banking stocks including Wells Fargo, Bank of America and Citigroup gained more than 1% each in premarket trading as the yield on the benchmark 10-year U.S. Treasury note topped 2% for the first time in 2-1/2 years. [US/]

However, megacap growth stocks like Apple Inc, Tesla Inc, Google-owner Alphabet Inc, Microsoft Corp and Amazon.com Inc that tend to get hurt from higher rates fell between 1.3% and 2.7%.

Wall Street indexes rallied in the past two sessions as the rate-sensitive growth stocks rebounded after a rough start to the year, while a batch of strong earnings also supported sentiment.

"Markets have been very constructive leading up to this news, especially with the Nasdaq retracing about half its losses from January lows, so we are certainly at a place where the reaction function has a downside to it," said Art Hogan, chief market strategist at National Securities.

At 09:04 a.m. ET, Dow e-minis were down 242 points, or 0.68%, S&P 500 e-minis were down 58.25 points, or 1.27%, and Nasdaq 100 e-minis were down 297.5 points, or 1.98%.

Meanwhile, the earnings season continued to be supportive, with 77.8% of the 316 companies in the S&P 500 that reported earnings through Wednesday topping analysts' profit expectations, according to Refinitiv data.

Walt Disney Co jumped 6.3% after beating revenue and profit estimates, while Mattel Inc surged 7.5% after forecasting full-year profit above estimates.

PepsiCo and Coca-Cola slipped more than 1% each after beating analysts' estimates for quarterly revenue.

Uber Technologies Inc climbed 4.6% after reporting its second quarterly operating profit as demand for ride-hailing services approached pre-pandemic levels and its food delivery business turned profitable.