U.S. stocks sold off on Thursday as investors parsed through more hotter-than-expected economic data and hawkish Fedspeak.
The yield on the benchmark 10-year U.S. Treasury note rose to 3.867% Thursday midday. The dollar index inched higher by nearly 0.09% to trade at $104.02. Energy traded lower, with WTI crude oil prices down at $78.03 a barrel.
Investors digested fresh economic data on Thursday, the headline of which was January’s producer price index (PPI). Headline PPI came in at a monthly increase of 0.7%, hotter than the 0.4% expected by economists.
Also on the macroeconomic front, the number of Americans filing new unemployment claims slid to 194,000 for the week ended Feb. 11, the Labor Department said on Thursday, lower than the 200,000 expected by economists.
Two Federal Reserve officials also made headlines Thursday with comments suggesting the central bank could be in for a long battle with inflation.
Federal Reserve Bank of Cleveland President Loretta Mester said she was open to raising interest rates by 0.50%, more than what her peers voted for during the last monetary policy meeting. Meanwhile, Federal Reserve Bank of St. Louis President James Bullard said he favors additional rate hikes amid sticky inflation at the Fed's March meeting. Bullard said he favored bringing up the federal funds rate to 5.375% as soon as possible, up from a current level of 4.50%-4.75%.
Stocks had capped off the previous session higher after economic data continued to suggest the economy remains resilient in the face of higher rates and sticky inflation.
Retail sales surged 3% in January, the Commerce Department said on Wednesday, reversing two consecutive monthly declines. Coupled with higher-than-expected reading on consumer prices Tuesday, concerns the Fed could keep raising interest rates have weighed on stocks this week.
“Robust job growth and a level-shift up in disposable income in the new year also contributed to the Jan spending spike,” Bank of America Economist Aditya Bhave wrote in a note following the release.
Economists at JPMorgan raised their Q1 GDP projection to 2% from 1% on the news, noting that the acceleration in retail sales adds to “the goldilocks view of growth without inflation.”
Meanwhile, the Congressional Budget Office warned on Wednesday that the Treasury Department’s ability to continue paying its government bills would be exhausted by the summer unless lawmakers strike a deal to raise the debt ceiling.
Builders continued to slow down home construction in January as housing starts fell to an annualized rate of 1.309 million homes, the Commerce Department said, down from the 1.356 million estimated. And permits to build slipped 0.1% to an annualized rate of 1.34 million, below consensus expectations of 1.35 million.
"The future for home construction became a bit bleaker this month as data on inflation, jobs and retail sales foreshadow the Federal Reserve may hike its federal fund rate higher than was expected a month ago," Robert Frick, corporate economist at Navy Federal Credit Union, wrote in a statement following the release.
In single stock moves, shares of Paramount (PARA) dropped 4.2% Thursday after the media giant reported an earnings miss on the top and bottom line. Revenue came in at $8.13 billion compared to $8.17 billion expected and subscriber growth also took a hit, reaching 9.9 million for the quarter versus the 10 million forecasted by analysts.
Shopify (SHOP) shares sank nearly 16% Thursday after the e-commerce company posted results for the fourth quarter, with revenue coming in at $1.73 billion against estimates for $1.65 billion. Adjusted earnings per share of $0.07 topped estimates for $0.02. The Ottawa-based company expects first-quarter revenue slightly below forecasts.
Roku (ROKU) stock rose Thursday after the company’s net revenue of $867.1 million topped expectations for $804.5 million. Fourth-quarter loss per share of $1.70 came in slightly below the $1.74 expected by analysts.
Shares of Cisco (CSCO) climbed more than 5% after the company raised its third-quarter revenue guidance to be between 11% to 13% higher year-over-year, topping analysts' expectations.
Tesla (TSLA) shares were down after the National Highway Traffic Safety Administration (NHTSA) announced Tesla would recall 362,758 vehicles, citing safety issues with its Full Self-Driving (FSD) beta software.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv