Consumer Data Stokes Inflation Worry, Wall St Falls

In the U.S., traders were also reacting to earnings news from several big-name financial companies, while semiconductor stocks moved sharply lower. Substantial weakness was also visible among steel stocks. In Malaysia, the FKLI rebounded strongly from Friday’s weak opening, as it managed to close 12 pts stronger at 1,383.5 pts. Sector-wise, the Financial Services Index was 10.16 points higher at 15,873.48, the Industrial Products and Services Index ticked up 1.37 points to 169.88, and the Plantation Index added 73.85 points to 6,421.87. The Energy Index perked up 0.74 of a point to 668.69.

U.S. stocks dropped on Friday as worsening inflation expectations kept intact worries that the Federal Reserve’s aggressive rate hike path could trigger a recession, while investors digested the early stages of earnings season.

In the last session of a volatile week, equities opened higher, then reversed course after data from the University of Michigan showed consumer sentiment improved in October but inflation expectations worsened as gasoline prices moved higher. Retail sales data also indicated resilience among consumers, Reuters cited.

“The main thrust for the market right now is higher interest rates, higher inflation and the Fed is going to continue to move its fed funds target higher,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan.

“The narrative that we’ve seen peak inflation is not evident yet and that’s depressing the market.”

On Thursday, a reading on consumer prices (CPI) showed inflation remained stubbornly high.

Fed officials have been largely in sync when commenting on the need to raise rates and St. Louis Fed President James Bullard said in a Reuters interview the recent CPI data warrants a continued “frontloading” through larger three-quarter-percentage point steps, although that does not necessarily mean rates need to be raised above the central bank’s most recent projections.

The Dow Jones Industrial Average (.DJI) fell 403.89 points, or 1.34%, to 29,634.83, the S&P 500 (.SPX) lost 86.84 points, or 2.37%, to 3,583.07 and the Nasdaq Composite (.IXIC) dropped 327.76 points, or 3.08%, to 10,321.39.

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