PremiumGlobal markets remain under pressure after comments by Fed officials indicating further interest rate hikes depressed investor sentiments. Domestically, the embattled Adani Group executives told investors they will address upcoming debt maturities, including by potentially offering private placement notes and using cash from operations.
Indian benchmark indices fell on Friday tracking Wall Street after a fresh slate of US economic data underscored bets that the Federal Reserve would keep interest rates higher for longer.
Rupak De at LKP Securities said, “The trend for the near term is likely to remain sideways to positive as long as it remains above the falling channel. A recovery towards the higher level will likely happen if the bulls manage to hold the Nifty above 17880. On the higher end, however, 18150 is likely to act as resistance."
The Nifty 50 index shed 92 points to end below 18,000, at 17,944. The S&P BSE Sensex slipped 316 points but managed to defend the 61,000 mark to close at 61,002.
Almost all sectoral indices closed in the red with IT, Bank and Pharma shedding the most. Oil & Gas index managed to end with minor gains.
Adani Enterprises once again ended in the red and closed 4% lower. IndusInd Bank and Nestle India shed around 3% each. L&T climbed 2%, while Ultratech Cement, BPCL, Hero Motors, and Asian Paints gained more than a per cent each.
Shares slipped in Europe and Asia on Friday after benchmarks on Wall Street had their biggest drop in four weeks as investors registered disappointment over an inflation reading that came in hotter than expected.
Japan's Nikkei index closed lower as technology heavyweights tracked Wall Street's sharp decline, but the losses were limited after a weaker yen raised expectations for higher earnings from domestic companies.
The Nikkei share average ended 0.66% lower and lost 0.57% for the week. The broader Topix shed 0.46% after touching a 2-1/2-month high in the previous session. The index posted a 0.25% weekly gain.
China and Hong Kong stocks also fell dragged by some tech stocks as markets were concerned that China's central bank might delay more easing measures to support the pandemic-hit economy.
Investors had previously expected more interest rate cuts from the Chinese central bank to support the economy. But with the U.S. Federal Reserve now expected to keep rates higher for longer, further rate cuts from China could widen the policy rate gap between the two nations and pose more economic challenges.
China's blue-chip CSI300 Index closed 1.44% lower, while the Shanghai Composite Index lost 0.77%. For the week, the two indexes lost 1.7% and 1.1%, respectively. Hong Kong benchmark Hang Seng was down 1.28% and fell 2.2% for the week.
European shares opened nearly 1% lower on Friday as rate-sensitive technology shares were hit by renewed bets on monetary tightening trajectory, while Mercedes-Benz and Sika rose on upbeat earnings. The pan-European STOXX 600 index slid in the morning session with technology shares tumbling 1.8%.
UK's FTSE 100 edged lower while NatWest fell to the bottom of the index after the British lender posted its full-year results. The blue-chip FTSE 100 lost in the morning session but is set to post a weekly gain. The index recorded its highest closing level on Thursday.
The relaunch of Zomato’s membership programme and its likely impact on the food delivery vertical’s profitability, going forward, continues to intrigue the Street, highlighted brokerage JM Financial. While the management believes that the short-term negative impact of free deliveries will be offset by improvements in other revenue and fixed & variable cost drivers, the complexity in forecasting margins keeps the debate raging.
“Basis the initial feedback from a small sample set of customers and the management commentary of visible green shoots in the form of an increase in app opens post the launch, we believe, ceteris paribus, that the Gold launch should certainly drive up order volume. We also believe that the company has enough levers both on revenue (restaurant commission take-rates and ad income) as well as variable cost (such as closure of operations in 225 cities that were loss-making and delivery partner-related efficiencies) that should partially (if not entirely) negate the impact of the free delivery benefit for Gold members," the note stated. (Read More)
Byju’s is in negotiations with investors including TPG to raise more than $500 million, a much-needed capital infusion that could help the world’s most valuable edtech startup stave off potential debt issues.
Several investment firms including TPG and two Middle Eastern sovereign wealth funds have begun due diligence on the Indian company, which is hoping to keep its valuation steady at about $22 billion during the financing, people familiar with the matter said. That’s despite a global tech rout that’s prompted layoffs in the thousands, depressed global investment activity and shaved billions off the valuations of once high-flying tech startups.
Byju’s may issue convertible notes that would turn into equity around an initial public offering, one of the people said. Negotiations on the amount and structure are ongoing and it’s unclear if the prospective investors will go ahead with a deal, the people said, who asked not to be identified as the information is private. (Bloomberg)
After Air India's historic order of 840 planes to Airbus and Boeing, other Indian airlines too are planning to order close to 1,200 more aircraft in over two years.
According to a report by the Centre for Asia Pacific Aviation India (CAPA India), Indian carriers are expected to place orders for additional 1,000-1,200 aircraft, starting off with another large order from IndiGo.
On 14 February, Tata-owned Air India confirmed that it will buy a total of 470 wide-body and narrow-body planes from Airbus and Boeing. The company had announced that the aviator will buy 220 flights from Boeing and 250 flights from Airbus. (Read More)
One of the European Central Bank’s most senior officials said that investors risk underestimating the persistence of inflation, and the response needed to bring it under control.
“We are still far away from claiming victory," Executive Board member Isabel Schnabel said in an interview, citing the strength of underlying price pressures and faster wage increases. The economy’s reaction to interest-rate increases may prove weaker than in prior episodes, and if that transpires, “we may have to act more forcefully."
The central bank has all but promised another half-point step in March, a hawkish stance that chimes with the US Federal Reserve’s own approach to continue steady hikes. Questioned if economists and investors are justified in assuming the ECB will halt tightening at a rate of 3.5%, Schnabel signaled that may be too optimistic.
“Markets are priced for perfection," she said. “They assume inflation is going to come down very quickly toward 2% and it is going to stay there, while the economy will do just fine. That would be a very good outcome, but there is a risk that inflation proves to be more persistent than is currently priced by financial markets." (Bloomberg)
CMP: Rs. 504
Target: Rs. 586 (12 Months)
Return: 16%
Increase in kit value per vehicle
UNO Minda Ltd (UML) is a diversified auto ancillary supplier, manufacturing products such as switches, horns & lights. UML holds a leadership position in the switch business with a market share of 67%.
Q3FY23 revenue came in above our expectations, registering a growth of 34%YoY, outperforming the industry growth of 4.5%YoY.
This was mainly on account of new customer additions in 2W/4W, new contents & leveraging the client base.
EBITDA margin came in at 11.6%(+82bps) owing to easing raw material prices (+110bps) and higher operating leverage. As a result, PAT grew by 60% YoY.
The content per vehicle has continued to grow at 10%-15% and it is expected to add more components to its product portfolio. Potential kit value for EV 2/3W is Rs.61,300/ vehicle.
We build our revenue CAGR over FY22-24E by 21%, factoring the demand stability, diversification and superior product mix.
Currently, the stock is trading at its long term historical avg of 35x. We believe, stock will continue to outperform owing to its diversified portfolio and strong order wins, and value UML at 34x FY25E EPS.
Hindustan Unilever Limited (HUL) on Friday said its laundry detergent brand, Surf excel has crossed the $1 billion turnover mark, becoming the first brand in the company’s portfolio to cross the milestone.
The move also marks the company’s dominance in the packed consumer goods market. With this, Surf excel became one of the few brands in the entire consumer packaged goods sector in India to achieve this distinction, the company said in a statement on Friday. (Read More)
The December quarter (Q3FY23) earnings performance of Heidelberg Cement Ltd was unimpressive with sales volume falling 3% year-on-year (YoY), indicating a continued market share loss. While variable expenses have started to soften due to easing fuel prices, subdued cement prices in the company's key markets of central and southern India kept realisations growth muted.
In an earnings call, the management said it expects good near-term traction in cement demand. With calendar year (CY) 2023 a pre-election year, demand for cement is poised to improve. It estimates cement demand in the central region to grow 5.5%-6% in FY23 and 7% in FY24. (Read More)
Goldman Sachs said it now expects the U.S. Federal Reserve to hike interest rates three more times this year by a quarter of a percentage point each after data released this week pointed to hot inflation and economic resilience.
The brokerage now sees 25 basis point hikes in March, May, and June, taking its expectations of a peak rate to 5.25%-5.5%. (Reuters)
The country's largest airline IndiGo, which is "back with a bang", is looking to start flights to Nairobi, Jakarta and some central Asian destinations as the carrier focuses on internationalisation, according to its chief Pieter Elbers.
Amid intensifying competition and Air India set for expansion with massive plane orders, the IndiGo chief asserted that there is a lot of growth ahead in the Indian market that "justifies multiple airlines". (Read More)
The initial public offering (IPO) of Macfos Ltd has opened for public subscription on Friday, February 17, 2023 and the three-day initial share sale will conclude on Tuesday, February 21, 2023. The price band of the offer has been fixed at ₹96 to ₹102 per share.
As of 12:15 pm on day 1, the issue has been oversubscribed 1.49 times, led by demand from retail investors' category that is overbooked over 3x, as per the BSE data.
“The Grey Market Premium (GMP) of Macfos Limited was observed at ₹78 in the grey market today, as per the market sources. The IPO has an issue band price of ₹96 – ₹102. Considering the upper band price, the listing price could be ₹180. One can expect listing gains of up to 76%," said Manish Khanna, Co-Founder, of Unlisted Assets. (Read More)
Drug firm Glenmark said it has received approval from the US health regulator to market a generic medication to treat diabetes in the American market.
Glenmark Pharmaceuticals Inc, USA, a unit of the company, has received tentative approval from the US Food & Drug Administration (US FDA) for Saxagliptin Tablets in strengths of 2.5 mg and 5 mg, the Mumbai-based drug maker said in a statement.
The company's product is the generic version of AstraZeneca AB's Onglyza tablets (2.5 mg and 5 mg), it added.
According to IQVIA sales data for the 12-month period ending December 2022, the Onglyza tablets (2.5 mg and 5 mg) achieved annual sales of around USD 122.3 million.
Glenmark said its current portfolio consists of 179 products authorised for distribution in the US marketplace. (PTI)
While its Big Tech rivals cut jobs, social media app TikTok now employs more than 5,000 people in Europe, it said in an emailed statement Friday. That’s up from just 208 in 2019, according to filings for TikTok Information Technologies UK Ltd., which operates TikTok for users in the UK, the European Economic Area, and Switzerland.
Owned by China’s Bytedance Ltd., TikTok is at an advanced stage of planning for a second data center in Ireland, and is holding talks to establish a third somewhere on the continent “in line with the growth of our community," which now numbers more than 150 million monthly users in Europe, the update added. It reiterated commitments made last year to reduce employee access to European user data, minimize data flows outside of Europe, and store European user data locally. (Bloomberg)
The National Real Estate Development Council (NAREDCO) has enrolled over 15,000 construction workers under the government’s National Initiative for Promotion of Upskilling of Nirman workers (NIPUN) project.
Housing and Urban Affairs Minister Hardeep Singh Puri launched this project for skill training of construction workers called “NIPUN," i.e., the National Initiative for Promoting Upskilling of Nirman workers, last year. (Read More)
Pricol Limited Managing Director Vikram Mohan said that neither he nor promoters or institutions, which own stakes in Pricol, have any intention to sell. This clarification comes a day after reports suggested Minda Corporation’s proposed equity acquisition in Pricol.
It has come to our attention through various media channels, that Minda Corporation intends to acquire a 15.7% stake in Pricol Limited. As Managing Director and representative of the Promoter Group of Pricol Limited, I would like to reiterate that the Promoter group stands absolutely committed to the company and its future prospects, the company said in an exchange filing on Friday. (Read More0
One of China's high-profile tech dealmakers and the Chairman and CEO of China Renaissance, Bao Fan has gone missing as his company is unable to contact him for a while.
The boutique investment bank on Sunday said, "The board is not aware of any information that indicates that Mr. Bao's unavailability is or might be related to the business and or operations of the Group which is continuing normally."
After the company said that it lost contact with the CEO, China Renaissance's share plunged by as much as 50% in early trade on Friday, reported Reuters. However, the company stock showed some improvement and was trading 26.50% lower at Hong Kong Stock exchange at 10:37 pm(IST). (Read More)
One of the market’s most popular ESG index providers says it will speed up its review of companies, after it failed to address allegations of poor governance at the Adani Group companies as quickly as its competitors.
MSCI Inc. will now review holdings in its ESG indexes on a monthly basis, more frequently than its previous quarterly schedule, the firm Thursday. Any companies involved in significant ESG controversies, and those that do not comply with the principles outlined by the United Nations global compact, will be stripped from the indexes. (Read More)
The Indian economy could see another bout of inflation as the rural demand revives and the informal sector recovers from the pandemic-lows, economists at HSBC Securities and Capital Markets (India) said.
Consumer price inflation remained above the central bank's upper tolerance band of 6% for most of 2022 before falling below it in the last two months of the year, only to resurge to 6.5% in January.
In contrast to the global experience, goods inflation in India is outpacing services, while core prices remain elevated, said Pranjul Bhandari and Aayushi Chaudhury, the economists said in a note on Thursday evening.
"We believe it has much to do with the recovery in rural and informal sector demand."
While rural demand was weak in the early part of last year, wage growth, adjusted for inflation, has now surpassed pre-pandemic levels, HSBC's research showed. Further, strong sowing patterns in the winter season will also help incomes. The informal sector, closely linked to the rural economy, is seeing a revival in step. (Reuters)
India will blacklist green energy developers who don’t complete renewable energy projects which was awarded to them within the prescribed time frame, along with encashing their bank guarantee, said two officials aware of the development.
An official circular to this effect has already been issued by the Ministry of New Renewable Energy (MNRE) on 15 February to state-run firms—-Solar Energy Corp. of India (SECI), NTPC Ltd and NHPC Ltd.
The circular reviewed by Mint states, “If any renewable energy project is not completed by the prescribed date of completion, then its Bank Guarantee should be encashed and the developer blacklisted after asking him to show cause. The blacklisting will be for a period of three to five years. These are in accordance with the General Financial Rules of the Government and apply to all tenders/bids." (Read More)
India power regulator has approved a proposal to start a separate spot market segment for "expensive power", fixing a ceiling of 50 Indian rupees ($0.6042) per unit, according to an order issued late on Thursday.
The approval, given to the country's largest spot power market, the Indian Energy Exchange, is for fuel generated from costlier sources like imported coal and gas.
Power plants that use those sources will be allowed to sell on the new market segment to be called 'high-price day-ahead market', the order said. (Reuters)
MCG major Nestle India Ltd on Thursday reported a 65.50 per cent increase in net profit at ₹628.06 crore for the fourth quarter ended December 31, 2022. The company, which follows the January-December financial year, had posted a net profit of ₹379.48 crore in the same period a year ago, Nestle India said in a regulatory filing. Nestle India's net sales rose 13.95 per cent to ₹4,233.27 crore during the period unde
Google India has reportedly fired 453 employees across various departments. As reported by Business Line, employees were informed of their termination through mail.
Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services: There is a clear pattern to the trends from the mother market, US. Whenever positive news like declining inflation comes, equity markets rise on hopes of a Fed pause and a possible rate cut by end 2023. Conversely, whenever data indicates a robust U.S. economy, tight labour market and very slow disinflation, equity markets fall expecting the Fed to remain hawkish. This see-saw game is likely to continue till clarity emerges on where the economy is headed. Nifty is likely to remain in the range 17800- 18200. As of now, there are no triggers to break this range in both directions. FIIs have sold in the cash market yesterday (excluding the ₹2300 crore Indigo deal) for ₹730 crores indicating that they will continue to sell at higher levels. The only sensible strategy in this volatility is to buy high-quality names across sectors during declines.
Reflecting the presence of huge market barriers in the country, India stood at 47th position in Services Trade Restrictiveness Index(STRI) conducted by the Organisation for Economic Cooperation and Development (OECD) for the year 2022. However, there was an improvement from last year's ranking by one position.
Due to the Russia-Ukraine war, Russia slipped to the 48th position in the index. The report highlighted the privatisation of Air India, the elimination of pricing guidelines for transfers of shares between residents and non-residents, and restriction of foreign participation in certain services sectors.
The STRI indices takes into consideration the government policies in several sectors that define the ease of trading in those sectors and industries. Based on these factors, STRI indices assign value to countries between zero and one. As per the index, zero shows least restriction and one shows no restriction. The database also records details based on a Most Favoured Nation basis. (Read More)
Hindustan Zinc is planning to get in touch with the mines ministry to resolve the differences over the acquisition of overseas assets of holding company Vedanta Ltd, Hindustan Zinc CEO Arun Misra said.
Valuation of the assets is among several concerns flagged by the government, which holds a 29.54 per cent stake in Hindustan Zinc Ltd (HZL) that was privatised more than two decades ago.
The meeting is expected shortly, Misra said.
"...we are reading in various newspapers about the comments of various minority shareholders. I have not met anybody personally. Once I meet them and know exactly what is their view then may be I can comment. I won't be able to offer any comment on other's comments which I can't verify personally," Misra told PTI.
According to a source, the objections on the proposal were raised by all three government directors in the nine-member HZL board. (PTI)
CRISIL will be among the stocks in focus as it will declare its December quarter earnings today. (Read More)
The Subject Expert Committee (SEC) of the Drugs Controller General of India (DCGI) has rejected Mumbai-based Glenmark’s nasal spray—FabiSpray— for covid, citing lack of strong evidence that it can prevent covid.
The expert panel said, “The committee did not recommend for approval of Nitric Oxide Nasal Spray due to lack of strong evidence for proposed indication," stated the Committee. Queries sent to health ministry spokespeople did not elicit a response. (Read More)
Oil prices slid on Friday and were on track for weekly losses as strong U.S. economic data heightened concern that the Federal Reserve will continue tight monetary policy to tackle inflation, which could hit fuel demand even as crude stockpiles grow.
Brent crude futures dropped 49 cents, or 0.6%, to $84.65 per barrel by 0105 GMT, while U.S. West Texas Intermediate (WTI) crude futures shed 46 cents, also a 0.6% loss, to $78.03. Both benchmarks were headed for a weekly decline of about 2%.
Data showed the U.S. producer price index rose 0.7% in January, after declining 0.2% in December. Meanwhile, jobless claims unexpectedly fell to 194,000, compared to the 200,000 forecast, according to a Reuters poll.
"Strong U.S. data bolstered concerns over rate hikes and prompted a rise in U.S. Treasury yields, which weighed on oil and other commodity prices," said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd. (Reuters)
Merger-bound mortgage lender HDFC on Thursday concluded its rupee-bond sale through the private placement route, mopping up ₹25,000 crore.
HDFC said it has raised ₹25,000 crore of 10-year money by issuing non-convertible debenture (NCDs) carrying a coupon rate of 7.97 per cent per annum. This translates to a spread of 49 basis points over Wednesday's closing of the 10-year government securities yield.
The issue was launched on Tuesday on the electronic book platform to raise ₹5,000 crore with an option to retain subscription for additional ₹20,000 crore.
"Today, as the bids opened, there was wide participation from several high-quality investors across insurance companies, pension funds, provident funds, banks and mutual funds. The issue was oversubscribed and received 92 bids amounting to ₹27,863 crore, of which the company retained 55 investor bids totalling to ₹25,000 crore," the issuer said. (PTI)
A majority of respondents in a survey claimed that they face call drop or call connection issues on any given day, online survey firm LocalCircles said on Thursday.
According to the survey report, 28 per cent respondents said that they get uninterrupted access to 4G or 5G network while 32 per cent shared that they do not have access to 4G or 5G services most of the time despite paying for it.
"Sixtynine per cent mobile service subscribers face call connection/call drop problems on any given day," the report said.
The survey received over 42,000 responses from citizens located in 338 districts of India. However, the number of responses varied from question to question, LocalCircles said.
A total of 10,927 people responded to questions on the frequency of call connection or call drop on any given day.
"36 per cent or more than one third of respondents stating 'up to 25 per cent of the calls'; 13 per cent indicated the percentage was as much as 25-50 per cent; while 10 per cent indicated a much higher percentage of 50-75 per cent and 10 per cent revealed that they face connectivity or call drop issues with 75 per cent or almost all calls," the report said. (PTI)
Visa Inc. said Chief Financial Officer Vasant Prabhu is retiring, the latest change in the payment giant’s executive ranks.
Prabhu, 63, will depart at the end of the firm’s fiscal year in September, the payments giant said Thursday in a statement. Chief Executive Officer Ryan McInerney took the reins of Visa earlier this month.
Prabhu has been Visa’s CFO since 2015. He oversaw its finances at a time when profits soared, the firm added hundreds of millions of cardholders, and spending on its network more than doubled. (Read More)
ReNew Energy Global Plc, one of India’s largest clean energy developers with a 13.4GW portfolio and 7.7GW commissioned capacity, plans to invest ₹35,000 crore in capital expenditure over 18 months. In an interview, founder chairman and chief executive Sumant Sinha spoke about ReNew’s capital recycling strategy, enough equity availability to build projects in its portfolio, and India’s strong position in solar and wind equipment manufacturing. In August 2021, ReNew Power merged with Nasdaq-listed special purpose acquisition company RMG Acquisition Corp. II (RMG II) to form ReNew Energy Global Plc, a new entity. Edited excerpts
Vaishali Parekh of Prabhudas Lilladher has recommended three stocks for intraday trading, here we list out full details in regard to those shares:
1] Piramal Pharma: Buy at ₹91.40, target ₹97, stop loss ₹89;
2] Jindal Steel: Buy at ₹601, target ₹636, stop loss ₹588; and
3] Coforge: Buy at ₹4229, target ₹4420, stop loss ₹4160. (Read More)
As many as four stocks have been put under the ban for trade on Friday, February 17, 2023, under the futures and options (F&O) segment by the National Stock Exchange (NSE). The securities have been put on ban under the F&O segment as they have crossed 95% of the market-wide position limit (MWPL), as per the NSE.
Ambuja Cements, Indiabulls Housing Finance, PSUs Punjab National Bank (PNB) and Bharat Heavy Electricals Limited (BHEL) stocks continue to be part of the F&O ban list by the stock exchange for today. The NSE updates the list of securities in F&O ban for trade every day. (Read More)
The rupee appreciated by 15 paise to close at 82.68 against the US currency on Thursday amid unabated foreign fund inflow and positive trend in domestic equities.
Forex traders said upbeat domestic trade deficit data and foreign fund inflows supported investor sentiments.
At the interbank foreign exchange market, the local unit opened at 82.72 against the American currency and finally settled at 82.68 against the greenback, registering a gain of 15 paise over its previous close of 82.83.
During the trading session, the rupee touched a high of 82.59 and a low of 82.73 against the dollar.
"The Indian rupee makes a comeback after three days of a down streak following stronger regional currencies, better-than-expected trade balance numbers and lower crude oil prices," Dilip Parmar, Research Analyst at HDFC Securities, said.
The local unit also got support from dollar inflows as foreign institutions turned buyers into domestic equities in the last couple of days, Parmar said. (PTI)
Industrial and automotive parts maker Schaeffler India on Thursday announced a 21 per cent growth in net profit at ₹231 crore in the fourth quarter of 2022.
The company had posted a net profit of ₹190.64 crore in the same quarter of the preceding calender year, according to a regulatory filing.
Schaeffler India follows the calendar year (January-December period) for financial reporting.
The revenue from operations for the quarter under review stood at ₹1,794.70 crore, up 17.8 per cent from ₹1,523.22 crore in the same quarter of 2021.
During the year 2022, the company's net profit stood at ₹879.20 crore from ₹629.12 crore in the year earlier, registering a growth of 40 per cent, as per the filing.
Total revenue from operations during the reporting year was ₹6,867.42 crore as compared to ₹5,560.51 crore in 2021.
"Our quarterly growth momentum continued on the back of favourable sales mix and our emphasis on deploying sustainable countermeasures to enable a strong quality of earnings, while navigating the headwinds in a highly volatile environment," said Harsha Kadam, Managing Director, Schaeffler India. (PTI)
Amid the Hindenburg controversy, Adani Group has decided to announce the refinancing plan of one of its subsidiaries by June-end, Reuters reported.
The embattled conglomerate told its bondholders on Thursday about the Adani Green Enenrgy's refinancing plan to bondholders on a call, Reuters reported citing sources.
Adani Group has hired banks to arrange calls with bond investors after it was caught up in a controversy with US-based short seller Hindenburg Research in recent weeks. (Read More)
IndiGo until now had the unique distinction of being the Indian carrier that sets the trend in the market with record plane orders. However, that changed on Tuesday with Air India announcing a historic confirmed order for 470 planes, joining IndiGo in becoming the second Indian airline with nearly 500 planes on order.
In an interview, IndiGo chief executive Peiter Elbers said the Air India order underscores the potential of the Indian market with two homegrown airlines placing such large orders. (Read More)
Wall Street ended sharply lower on Thursday after unexpectedly strong inflation data and a drop in weekly jobless claims added to fears that the U.S. Federal Reserve will keep raising interest rates to tame high prices.
A Labor Department report showed the highest rise in producer prices in seven months in January as the cost of energy products surged.
It also showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, offering more evidence that the labor market remains tight.
Thursday's economic data and other reports this week paint a picture of still-stubborn inflation and an economy that remains relatively strong in the face of the Fed's rate hike campaign.
"With data like this, the Fed is going to keep raising rates, and none of us want that," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. "There are at least whispers now of the possibility of a 50 basis point hike at the next meeting."
After a selloff in 2022, the S&P 500 has climbed about 7% so far in 2023, fueled by upbeat earnings and cautious expectations the U.S. central bank has completed the brunt of its rate hike campaign.
The Fed is seen pushing the benchmark rate above the 5% mark by May and keeping it above those levels till the year-end. (Reuters)
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