Inflation data pressures Wall Street shares, offsets optimism
A street sign for Wall Street is seen outside the New York Stock Exchange (NYSE) in New York City, New York, U.S., July 19, 2021. REUTERS/Andrew Kelly/File Photo
WASHINGTON/LONDON, Sept 10 (Reuters) - Wall Street main indexes finished lower on Friday after data showing persistent U.S. inflation offset expectations of an easing in U.S.-China tensions after a call between President Joe Biden and Chinas Xi Jinping.
U.S. producer prices increased solidly in August, indicating that high inflation is likely to persist for a while, with supply chains remaining tight as the COVID-19 pandemic drags on.
"Headlines reflecting the highest annual producer price increases in decades won’t give those worried about inflation much comfort, but the smaller month-over-month increase and recent evidence indicating supply chain bottlenecks are no longer intensifying suggest a peak in producer inflation may be near," said Marc Zabicki, director of research for LPL Financial.
The Dow Jones Industrial Average (.DJI) fell 64.65 points, or 0.19 percent, to 34,814.73; the S&P 500 (.SPX) lost 4.21 points, or 0.09 percent, to 4,489.07 and the Nasdaq Composite (.IXIC) dropped 3.20 points, or 0.02 percent, to 15,245.06.
Earlier, global equities markets gained after news that the U.S. president and his Chinese counterpart spoke for 90 minutes on Thursday, their first talk in seven months, discussing the need to avoid conflict between the worlds two largest economies. read more
China shares (.CSI300)rose 0.08%, giving a fillip to the region and lifting MSCIs World index (.MIWD00000PUS), its broadest gauge of global stock markets 0.07%, on course to end a three-day losing streak.
Despite the gains, helped by a similar performance across Europes top markets, the index remains down 0.6% on the week and on course for its first drop in three, albeit hovering near a record high.
Apple Inc (AAPL.O) fell over 3% following a U.S. court ruling in "Fortnite" creator Epic Games antitrust lawsuit that struck down some of the iPhone makers restrictions on how developers can collect payments in apps.
The pace at which central banks, especially the U.S. Federal Reserve and European Central Bank, choose to trim their economic support remains the driving force of market sentiment amid rising inflation concerns.
Thursdays move by the ECB to trim bond purchases slightly is expected to be followed by the Fed later this year, according to some officials, despite a weak August U.S. jobs report. read more
"With the ECB raising its economic projections for 2022 and beyond, it appears that the high-water mark in policy accommodation has been passed," said Mark Dowding, chief investment officer at BlueBay Asset Management.
Despite the prospect of reduced stimulus packages, Mark Haefele, chief investment officer at UBS Global Wealth Management, said he expected central banks to keep interest rates low.
"This is positive for equity markets, particularly cyclical and value areas of the market. And while this complicates the search for yield, we continue to see opportunities," he wrote in a note to clients.