January 27, 2023

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Wall Street finishes lower as investors digest Reuters economic data

©Reuters. FILE PHOTO: A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 29, 2022. REUTERS/Brendan McDermid

By Ankika Biswas and Noel Randewich

(Reuters) – Wall Street closed lower on Friday as investors assessed economic data and waited for a possible 50 basis point rate hike by the US Federal Reserve at its monetary policy meeting next week, while apparel company Lululemon tumbled after a disappointing earnings forecast.

US producer prices rose slightly more-than-expected in November on a rise in service costs, but the trend is moderating, with annual factory gate inflation posting its slowest rise in 1-1/2 years, the data showed.

“Today’s data shows that inflation is decelerating, but it’s continuing and tougher than most realize,” said Anthony Saglimbene, chief markets strategist at Ameriprise Financial (NYSE:) in Troy, Michigan. Consumer sentiment improved in December, but inflation expectations fell to a 15-month low, a University of Michigan survey showed.

Futures trades suggest a 77% chance of the Fed raising rates by 50 basis points next week, with a 23% chance of a 75 basis point hike, with those chances little changed after Friday’s economic data .

November consumer price data, due Tuesday, will provide fresh clues about the central bank’s plans to tighten monetary policy.

Lululemon Athletica (NASDAQ:) Inc tumbled nearly 13% after the Canadian sportswear maker forecast lower-than-expected sales and earnings for the holiday quarter.

Netflix Inc (NASDAQ:) gained 3.1% after Wells Fargo (NYSE:) upgraded the video-streaming giant from even to overweight.

It declined 0.73% to end the session at 3,934.38 points.

The Nasdaq fell 0.70% to 11,004.62 points while declining 0.90% to 33,476.46 points.

Of the S&P 500’s 11 sector indices, 10 declined, led by energy, down 2.33%, followed by healthcare, down 1.28%.

The energy index posted losses for the seventh straight month, its longest losing streak since December 2018, as oil prices appeared poised for weekly losses on recession concerns. [O/R]

Wall Street’s main indices fell this week after posting two straight weeks of gains. Investors are weighing heavily on fears of a possible recession next year due to the central bank’s extended rate hikes.

For the week, the S&P 500 fell 3.4%, the Dow 2.8% and the Nasdaq 4%.

US stocks ended a recent losing streak on Thursday after data showed initial jobless claims rose slightly last week.

Broadcom (NASDAQ:) Inc rose 2.6% after the chipmaker forecast current-quarter earnings above Wall Street estimates.

Boeing (NYSE:) Co rose 0.3% after Reuters reported that the planemaker plans to announce a deal with United Airlines next week for 787 Dreamliner orders.

Declining stocks outnumbered rising stocks in the S&P 500 by a ratio of 3.3 to one.

The S&P 500 posted 5 new highs and 1 new low; The Nasdaq recorded 54 new highs and 213 new lows.

Volume on US exchanges was relatively light at 9.9 billion shares traded, compared to an average of 10.9 billion shares over the past 20 sessions.