Wall Street’s main indexes slipped as the Fed shows no sign of ending high interest rates

Following the US Federal Reserve’s strategy of boosting interest rates, inflation was seemingly tamed, at least to an extent. However, investors across the country continue to worry that the Fed might not be able to give up on this strategy anytime soon, which led to noticeable slippage of Wall Street’s main indexes.

Reports reveal the growth of producer prices

With the end of Friday, the trading portion of the week has finally concluded, and not in a good way. Wall Street’s main indexes slipped noticeably following a higher-than-expected surge in monthly producer prices. This, in turn, boosted the fears that the Fed will stick to strong interest rate hikes moving forward. For the time being, the end of the current strategy is nowhere in sight.

Producer prices saw a 7.4% increase last month on a yearly basis, according to the recent report, which was slightly more than the projected 7.2%. On the plus side, the rise was still lower than what was seen in October, when the producer prices went up by 8%.

A higher-than-expected surge was also noticed in core producer prices, which were expected to go up by 5.9%, according to the report. Instead, they climbed up by 6.2%, despite the fact that volatile food and energy components are not included here. Dakota Wealth’s senior portfolio manager, Robert Pavlik, commented on the development, noting that it has been rather disappointing. He said that the current situation shows that the economy is in a bad place — stuck on the treadmill of inflation. With that in mind, the market sell-offs like the ones that were seen recently are not at all surprising.

There was also no change in the bets predicting that the Fed will raise its policy rate by 50 basis points until it reaches the levels between 4.25% and 4.50%. This is expected to happen next week, and while it still remains to be seen what will actually happen, the odds are that the predictions are on point.

Another thing expected next week is the arrival of the consumer prices data for November, which should be published on Tuesday. Investors are expected to comb through the data in order to find any clues regarding the future plans of the central bank.

Meanwhile, the University of Michigan has published preliminary results of the readings involving consumer sentiment. Interestingly enough, the readings revealed an improvement of the figures, which were at 56.8 in November. They have now climbed to 59.1 for December. However, Wall Street’s main indexes have seen two months of constant fears of a possible recession that might arrive in 2023, which finally started to wear them down, leading them to succumb under pressure.

US stocks already saw losses this Thursday as jobless claims rose throughout the week, indicating that the labor market is deteriorating. Dow Jones Industrial Average was down by 0.26% Friday, which translates to around 86.15 points, at 33,695.33. Nasdaq Composite was down 16.35 points (0.15%) at 11,065.66, while S&P 500 was down 5.98 points (0.15%) at 3.957.53.

Mega-cap tech and growth stocks were mixed; Netflix saw 4.5% gains, while Carvana Co saw an 8% drop. Broadcom Inc moved up by 3.6%, but Lululemon Athletica Inc tumbled by 12.2%