The US markets ended mostly in red on Wednesday with Dow Jones Industrial Average settling lower by over 220 points, after a hotter-than-expected U.S. inflation reading added to worries that the Federal Reserve would not cut interest rates anytime soon. Consumer prices in the U.S. increased by more than expected in the month of January, according to a report released by the Labor Department. The Labor Department said its consumer price index advanced by 0.5 percent in January after climbing by 0.4 percent in December. Street had expected consumer prices to rise by 0.3 percent. The report also said the annual rate of consumer price growth accelerated to 3.0 percent in January from 2.9 percent in December, while street had expected the pace of growth to remain unchanged. The bigger than expected monthly increase by consumer prices partly reflected a continued surge by energy prices, which shot up by 1.1 percent in January after spiking by 2.4 percent in December.
The annual rate of core consumer price growth also ticked up to 3.3 percent in January from 3.2 percent in December. Street had expected the pace of growth to slow to 3.1 percent. The hotter than expected inflation data increased speculation the Federal Reserve will leave interest rates on hold for a prolonged period. On the sectoral front, oil producer stocks moved sharply lower over the course of the session, dragging the NYSE Arca Oil Index down by 2.9 percent. Significant weakness also remained visible among interest rate-sensitive housing stocks, as reflected by the 1.7 percent loss posted by the Philadelphia Housing Sector Index. Natural gas, steel and commercial real estate stocks also saw notable weakness, while gold stocks showed a strong move to the upside despite a modest decrease by the price of the precious metal.
Dow Jones Industrial Average fell 225.09 points or 0.5 percent to 44,368.56 and S&P 500 was down by 16.53 points or 0.27 percent to 6,051.97, while Nasdaq rose 6.09 points or 0.03 percent to 19,649.95.
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