Stocks looked poised to snap their three-day rally on Wednesday as data from the Labor Department suggested inflation is accelerating.
Gold futures were down sharply before the opening bell in New York. Yet spot gold recovered to $1,335/oz (+0.45%) in early trading.
Spot silver advanced 6¢ (+0.33%) to $16.61/oz.
Platinum and palladium were both higher this morning, trading at $979/oz and $985/oz, respectively.
Inflation Exceeds Expectations In January
The consumer price index (CPI) for January was announced this morning. The Department of Labor reported that CPI rose 0.5% last month.
This index is one of the leading gauges of price inflation.
Year-on-year, CPI was up 2.1%. Not only did this beat expectations, but it was the fastest rise in about a year.
The core CPI was also up 1.8% year-on-year when food and energy were stripped from the data.
These signs of higher inflation pushed stocks lower at the open.
It's likely that interest rates will be going up at a faster clip if inflation pressures continue to mount.
In a separate report, retail sales for January fell by the most in 11 months, slipping 0.3%.
Meanwhile, home prices have jumped to record highs across much of the U.S.
Markets Continue to Digest an Evolving Economic Outlook
The U.S. bond market followed stocks lower on Wednesday.
The 10-year Treasury yield eased off of a four-year high but was still up four basis points to 2.87%.
This didn't have much impact on the dollar. The DXY index traded higher around 89.9.
Still, the Japanese yen hit a five-month high of ¥107.15.
The British pound was off 0.4% and the euro was down 0.3% to $1.23.
Safe-haven demand also benefited the Swiss franc.
In the equity markets, European stocks were mostly in the green, although Germany's DAX index traded slightly in negative territory.
Shares lost ground in Japan due to the stronger yen but the Hang Seng index in Hong Kong was up better than 2% overnight.
International tensions may be rising after news that the U.S. conducted airstrikes on what are believed to be Russian forces in Syria.
Commodities were off for the most part on Wednesday. The WTI crude oil price was down 1.2% (-70¢) to $58.50 per barrel.
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