Wall St slides as inflation data, policymakers stoke rate worries

  • Marriott rises on upbeat profit outlook
  • Coca-Cola Co dips after quarterly report
  • Palantir surges on forecasting profitable year

Feb 14 (Reuters) – Wall Street stocks ended mixed on Tuesday after U.S. consumer price data for January offered little to change expectations about the Federal Reserve’s path forward on interest rate hikes.

U.S. consumer prices accelerated as Americans continued to be burdened by higher rental housing costs, suggesting that the Fed will maintain a moderate rate hiking path.

“Inflation remains elevated, albeit it appears to be slowing,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis. “Looking at today’s price action, I think it might be a little bit of profit-taking on the heels of strong year-to-date performance.”

Money market traders are betting on at least two more 25 basis point rate hikes this year, with interest rates seen peaking at 5.28% by July.

Also adding to the investor angst were hawkish remarks by Richmond Fed President Thomas Barkin and Dallas Fed President Lorie Logan. Barkin said the Fed needs to prioritize quashing inflation over risks to U.S. economic growth.

Wall Street had an upbeat start to the year, lifted by renewed interest in volatile growth stocks battered in 2022 as the Fed raised rates aggressively to bring steep prices under control.

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The rally, however, stalled last week following signs of a tight labor market and hawkish commentary from Fed policymakers.

The S&P 500 is up about 8% so far in 2023, while the Nasdaq Composite Index (.IXIC) has rebounded about 14%.

Investors will closely watch January retail sales data on Wednesday for hints on consumer spending amid worries of an economic slowdown.

According to preliminary data, the S&P 500 (.SPX) lost 1.26 points, or 0.03%, to end at 4,136.03 points, while the Nasdaq Composite (.IXIC) gained 65.49 points, or 0.55%, to 11,959.08. The Dow Jones Industrial Average (.DJI) fell 164.41 points, or 0.48%, to 34,081.52.

Shares of Boeing Co (BA.N) rose to their highest in over a year after Air India unveiled a deal to buy 220 of its passenger planes.

Coca-Cola Co (KO.N) slipped despite a strong full-year profit forecast.

Marriott International Inc (MAR.O) rose after the hotel operator forecast first-quarter earnings above Wall Street estimates as it benefited from strong travel demand.

Palantir Technologies (PLTR.N) soared after the data analytics firm forecast its first profitable year.

Of the more than half of S&P 500 firms that have reported results, nearly 69% have beaten profit expectations, as per Refinitiv on Friday. However, analysts expect fourth-quarter earnings to fall 2.8% from a year earlier.

Reporting by Johann M Cherian and Sruthi Shankar in Bengaluru, and by Noel Randewich in Oakland, California; Additional reporting by Stephen Culp in New York; Editing by Sriraj Kalluvila, Maju Samuel and Richard Chang

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