“U.S. Stocks Fluctuate as Traders Weigh Fed Outlook.”
U.S. stocks pared declines, as financial shares pushed higher with 10-year Treasury yields after data showed an unexpected acceleration in price gains.
The S&P 500 Index was slightly higher after erasing a drop of 0.5 percent. Futures on the measure had tumbled more than 1 percent after the inflation report and the 10-year rate spiked toward a four-year high on concern the Federal Reserve would quicken its pace of tightening. Stocks climbed back from lows as investors weighed a separate report showing a slowdown in retail spending that raised questions about the strength of the American consumer.
While the price data added to signs of an inflation pickup that have roiled financial markets this month, investors must now weigh whether the acceleration will force the Fed to raise rates faster than the market currently anticipates or if the retail sales signal a potential crack in economic fundamentals.
“The concern is that the Fed takes a more aggressive stance,” said Ernie Cecilia, the chief investment officer at Bryn Mawr Trust Co. “Higher rates at both the short and long end would be higher competition to stocks. It gives investors other alternatives.” New Fed Chairman Jerome Powell suggested Tuesday that officials would forge ahead with gradual tightening even as it keeps an eye on financial-system risks following the recent equity rout.
“U.S. consumer prices accelerate in January; core CPI rises.”
U.S. consumer prices rose more than expected in January, with a measure of underlying inflation posting its biggest gain in a year, strengthening expectations the Federal Reserve will have to quicken the pace of interest rate increases this year.
The fairly strong inflation report from the Labor Department on Wednesday put more pressure on U.S. financial markets, which were spooked by a surge in annual wage growth in January. U.S. stock index futures fell more than one percent after the inflation data before paring some of the losses and U.S. Treasury yields rose to session highs.
The Labor Department said its Consumer Price Index increased 0.5 percent last month as households paid more for gasoline, rental accommodation and healthcare. The CPI rose 0.2 percent in December. The year-on-year increase in the CPI was unchanged at 2.1 percent as the large price gains from last year dropped out of the calculation.
Excluding the volatile food and energy components, the CPI shot up 0.3 percent. That was the largest increase since January 2017 and followed a 0.2 percent rise in December. The year-on-year rise in the so-called core CPI was unchanged at 1.8 percent in January, also because of less favorable base effects.
Base effects will turn more favorable in March, which economists say would set the course for higher annual inflation readings. Average hourly earnings jumped 2.9 percent on an annual basis in January, the largest rise since June 2009, from 2.7 percent in December.
A pickup in wage growth as the labor market hits full employment is expected to contribute to higher inflation this year. Price pressures are also seen being fanned by fiscal stimulus in the form of a $1.5 trillion tax cut package and increased government spending.
“European Union grows at fastest pace for 10 years.”
The European Union economy grew at its fastest pace in a decade last year, figures from the EU statistics office Eurostat have confirmed. The 28-strong EU expanded by 2.5% in 2017, its strongest performance since 2007, when it grew by 2.7%.
In the final three months both the EU and the 19-nation eurozone grew by 0.6% compared with the previous quarter. That was mirrored by growth in the EU’s biggest economy, Germany, which grew by 0.6% in the final quarter of 2017.
France also expanded by 0.6%, while Spanish growth was a notch stronger at 0.7%. Overall in 2017, the eurozone grew by 2.5%, Eurostat said, the fastest growth rate since a 3% rise in 2007. These latest figures confirm the flash estimates published by Eurostat at the end of January, which were based on more limited data.
Investec economist Ryan Djajasaputra said much of the growth last year had been driven by the eurozone’s core four economies: Germany, France, Italy and Spain. However, Eastern European economies, including Latvia and Slovakia, were growing «particularly fast», he added.
He attributed the strength of the eurozone to the European Central Bank’s (ECB) stimulus policies, which have brought down the cost of borrowing in recent years. In addition, he said confidence had been hitting record levels since the crisis years in the eurozone and unemployment was down to pre-crisis levels.
KPMG chief economist Yael Selfin said the figures confirmed the «continuation of strong growth momentum in [the] eurozone, helped by generous support from the European Central Bank and a more pro-growth political drive in some of its main economies.
“Shooting near U.S. National Security Agency, scene secure.”
At least one person was shot and wounded at the U.S. National Security Agency’s headquarters at Fort Meade, Maryland, on Wednesday and one person was in custody, but officials have secured the area and there was no continuing threat, local media reported.
A Fort Meade spokesman confirmed one person had been injured and transported and that a main highway was closed near the facility, a U.S. Army installation about 30 miles (48 km) northeast of Washington.
The Federal Bureau of Investigation confirmed on Twitter that its Baltimore office had sent agents to investigate the incident, its Baltimore office said on Twitter.
Local media quoted an NSA spokesman as saying the area was now secure.
“NSA police and local law enforcement are addressing an incident that took place this morning at one of NSA’s secure vehicle entry gate,” ABC News quoted the spokesman as saying. “The situation is under control and there is no ongoing security of safety threat.”
In March 2015, two people tried to drive their sports utility vehicle through the NSA’s heavily guarded gate. Officers shot at the vehicle when they refused to stop, killing one of the occupants. The people in the vehicle may have taken a wrong turn after partying and taking drugs, according to news reports.