NEW YORK (AP) — Stocks are falling and bond yields are snapping higher after a hot reading on inflation led investors to anticipate a big increase in interest rates at the Federal Reserve’s meeting next month. The S&P 500 fell 1% and the yield on the 10-year Treasury went as high as 2%, a level it hasn’t seen since August 2019. Consumer prices soared 7.5% in January, the highest rate in four decades and more than economists expected. A recent burst of inflation has been hammering America’s consumers and businesses, wiping out pay raises and reinforcing the Fed’s decision to start raising rates from their historic lows.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
NEW YORK (AP) — U.S. markets are falling after a report showed inflation in the U.S. is running hotter than previously thought.
Futures for the Dow Jones Industrial dropped 0.6%, while futures for the S&P 500 declined by 1.2%. Nasdaq futures dropped more sharply, down 1.9%.
Labor Department data showed that inflation soared over the past year at its highest rate in four decades, hammering America’s consumers, wiping out pay raises and reinforcing the Federal Reserve’s decision to begin raising borrowing rates across the economy. The consumer price index rose 7.5% year over year in January, while the expectation was for an increase of 7.3%
Bond yields rose on the news. The yield on the 10-year Treasury rose to 1.99%. The yield hasn’t been above 2% since August 2019.
European markets moved lower after the U.S. inflation numbers came out. Germany’s DAX slipped 0.1% and France’s CAC 40 edged down 0.5% after being up earlier.
The Walt Disney Co. gained more than 6.2% in off-hours trading after it reported a rebound in theme-park attendance last quarter and that it added more subscribers to its Disney+ streaming service than analysts expected.
Japan’s benchmark Nikkei 225 rose 0.4% to finish at 27,696.08. Australia’s S&P/ASX 200 gained 0.3% to 7,288.50. South Korea’s Kospi added 0.1% to 2,771.93. Hong Kong’s Hang Seng edged up 0.4% to 24,924.35, while the Shanghai Composite edged up 0.2% to 3,485.91.
Japan extended measures in Tokyo and some other places to curb outbreaks of the coronavirus for three weeks, until March 6, to try to bring the spread of the omicron variant under control. The restrictions, mostly requests to restaurants and bars to close early, had been scheduled to end on Sunday.
Also on market players’ minds is how Russia has massed over 100,000 troops near Ukraine’s border, prompting protests from the U.S., Europe and other allies. Western nations say they will impose their toughest-ever sanctions on Russian businesses and individuals if Moscow invades Ukraine.
