Producers of metals and other raw materials fell sharply as the dollar rose in the wake of surprisingly strong inflation data.
The Labor Department said consumer prices rose 3.1% in January from a year earlier, slowing from a December gain of 3.4%, but well ahead of economists' expectations of a 2.9%.
"Today's CPI report caught a lot of people off guard - many investors were expecting the Fed to begin cutting rates and were spending a lot of time arguing that the Fed was taking too long to get started - not appreciating that inflation could be sticky and not continue down in a straight line," said Chris Zaccarelli, chief investment officer for financial advisory network the Indepdent Advisor Alliance.
"This is only one month's report and if next month's report shows a decline in inflation then this will have been just a bump in the road, but if we see a new pattern of inflation stalling out at current levels (or worse increasing from here) then the stock market has further to fall," Zaccarelli said.
Gold miners slid, as the dollar spiked against rival currencies in the wake of the inflation data. Precious metals are particularly sensitive to shifts in the U.S. dollar, particularly when those shifts reflect changes in interest-rate calculations.
Barrick Gold shares declined ahead of the Canadian gold-mining giant's earnings. Shares of Newmont fell by more than 4%.
Enviva, the largest U.S. wood pellet exporter, is preparing to file for bankruptcy within days after a bad bet on future prices of the commodity triggered major losses.
Write to Rob Curran at rob.curran@dowjones.com
(END) Dow Jones Newswires
02-13-24 1720ET
