Stocks fell Thursday as investors weighed another red hot inflation report and its implications on the Federal Reserve's next moves. The Dow Jones Industrial Average (NYSE: DIA) fell over 400 points, while the S&P 500 Index (NYSE: SPY) and Nasdaq Composite (NASDAQ: QQQ) declined about 1.4% and 1.8%, respectively.
Here's how the market settled on Thursday:
S&P 500 Index (NYSE: SPY): -1.38% or -57.19 points to 4,090.41
Dow Jones Industrial Average (NYSE: DIA): -1.26% or -431.20 points to 33,696.85
Nasdaq Composite Index (NASDAQ: QQQ): -1.78% or -214.76 points to 11,855.83
Market participants have reacted to a week of unexpected economic results, with U.S. retail sales on Wednesday surging 3% in January reversing two consecutive months of declines despite persistently high inflationary pressures. Those continuous inflationary pressures were demonstrated on Tuesday with January's consumer price index (CPI) report coming in hotter-than-expected at a 0.5% monthly gain to an annual increase of 6.4%.
On Thursday, investors were met with more hot inflation data, with January's producer price index (PPI) increasing 0.7% for the month, above the 0.4% gain expected by economists. This marked the largest increase for wholesale prices since June. On a 12-month basis, headline PPI rose by 6%.
Core PPI, which excludes food and energy prices, rose by 0.5%, above expectations for a 0.3% increase. Core PPI excluding trade services rose 0.6%, also above estimates for a 0.2% rise.
Meanwhile, new U.S. home construction declined for a fifth month in January to the lowest level since June 2020 as increased mortgage rates continued to hamper on housing demand. Housing starts fell 4.5% to a 1.31 million annualized rate, according to the Commerce Department's report on Thursday. New building permits also declined by 0.1 to an annualized rate of 1.34 million.
Elsewhere, initial unemployment filings decreased to 194,000 from the week ended February 11, the Labor Department said Thursday, below estimates for 200,000. The previous week's total was revised slightly lower as well to 195,000 from 196,000. Investors have grown concerned that the labor market's resilience in spite of the central bank's interest rate hikes will keep the Fed aggressive as it works to stabilize prices.
On the earnings front, Paramount Global (NASDAQ: PARA) shares declined after the media giant reported an earnings miss for the fourth-quarter. However, the company is optimistic towards the strength of its streaming business and announced plans to increase prices for Paramount+ this year. The platform added 9.9 million subscribers during the fourth-quarter, bringing its total subscriber count to nearly 56 million.
Shopify (NYSE: SHOP) shares fell after the e-commerce software company topped earnings estimates for the fourth-quarter, but issued lackluster first-quarter revenue forecasts for growth in the high-teen percentages. Roku (NASDAQ: ROKU) shares rose after the streaming device company posted a narrower-than-expected loss and beat sales estimates in the fourth-quarter. Cisco Systems (NASDAQ: CSCO) shares rose after the communications company issued better-than-expected earnings and raised its third-quarter revenue guidance to be between 11% to 13% higher year-over-year.
In other stock news, DocuSign (NASDAQ: DOCU) announced plans on Thursday to cut about 10% of its workforce. The e-signature software company said the layoffs will support the company's growth, scale and profitability objectives. DocuSign expected to incur an impairment charge of about $25 million to $35 million, which will be seen in the first quarter of fiscal 2024.
Google's (NASDAQ: GOOGL) YouTube CEO Susan Wojcicki announced Thursday that she is stepping down after 9 years, with Chief Product Officer Neal Mohan becoming the SVP and new head of the video-sharing platform. "The time is right for me, and I fell able to do this because we have an incredible leadership in place at YouTube," she wrote in a blogpost. "When I joined YouTube nine years ago, one of my first priorities was bringing in an incredible leadership team."
Looking ahead, investors will continue to look for signs of strength and weakness in quarterly corporate earnings reports. DropBox (NASDAQ: DBX), DoorDash (NYSE: DASH) and DraftKings (NASDAQ: DKNG) are all slated to report after market close.