After turning lower over the course of morning trading on Thursday, stocks staged a notable recovery attempt in the latter part of the session. The major averages climbed well off their worst levels of the day, eventually closing roughly flat.
The Dow fell as much as 270 points but rebounded to end the day up 15.29 points or less than tenth of a percent at 37,711.02. The Nasdaq also crept up 0.54 points or less than a tenth of a percent to 14,970.19, but the S&P 500 edged down 3.21 points or 0.1 percent at 4,780.24.
The early downturn on Wall Street came as traders digested the Labor Department’s highly anticipated report on consumer price inflation in December, which showed prices rose by slightly more than expected.
The Labor Department said its consumer price index climbed by 0.3 percent in December after inching up by 0.1 percent in November. Economists had expected consumer prices to rise by 0.2 percent.
Excluding food and energy prices, core consumer prices still rose by 0.3 percent in December, matching the increase seen in November as well as economist estimates.
The report also showed the annual rate of consumer price growth accelerated to 3.4 percent in December from 3.1 percent in November. The annual rate of growth was expected to tick up to 3.2 percent.
Meanwhile, the annual rate of growth by core consumer prices slowed to 3.9 percent in December from 4.0 percent in November. Economists had expected the pace of core price growth to decelerate to 3.8 percent.
A number of economists have said the data makes the Federal Reserve less likely to cut interest rates in March, with many predicting the central bank will hold off until its May meeting.
Nonetheless, persistent optimism about a March rate cut may have contributed to the late-day recovery attempt by stocks, with CME Group’s FedWatch Tool currently still indicating a 70.0 percent chance the Fed will lower rates.
The late-day recovery attempt on Wall Street also came as treasury yields showed a notable move to the downside after showing a lack of direction for much of the day.
Sector News
Despite the recovery by the broader markets, interest rate-sensitive utilities stocks continued to see substantial weakness, with the Dow Jones Utility Average tumbling by 2.2 percent.
Natural gas stocks also saw considerable weakness amid a decrease by the price of the commodity, dragging the NYSE Arca Natural Gas Index down by 1.4 percent.
Telecom, biotechnology and banking stocks also moved to the downside on the day, while some strength emerged among software and oil stocks.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan’s Nikkei 225 Index surged by 1.8 percent, while Hong Kong’s Hang Seng Index jumped by 1.3 percent.
Meanwhile, the major European markets moved to the downside on the day. While the U.K.’s FTSE 100 Index slumped by 1.0 percent, the German DAX Index slid by 0.9 percent and the French CAC 40 Index fell by 0.5 percent.
In the bond market, treasuries rallied going into the close after showing a lack of direction for much of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 5.3 basis points to 3.977 percent.
Looking Ahead
Trading on Friday may be impacted by reaction to a report on producer price inflation, although the data typically attracts less attention than the consumer price inflation report.
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