U.S. stocks opened lower on Friday as the S&P 500 retreated from its latest record close after a reading on wholesale inflation confirmed that price pressures intensified in January.

How stocks are trading

  • The S&P 500
    shed 8.5 points, or 0.2%, to 5,021.

  • The Dow Jones Industrial Average
    shed 160 points, or 0.4%, at 38610.

  • The Nasdaq Composite
    was marginally lower at 15901.

On Thursday, the S&P 500 rose 0.6% to 5,029.73, notching its 11th record close of the year. The Dow Jones Industrial Average gained 0.9% to 38,773.12 and the Nasdaq Composite climbed 0.3%, to 15,906.17.

What’s driving markets

U.S. stocks retreated at the open on Friday after the release of the January PPI report. The report, like the CPI data released earlier in the week, reflected a larger increase in prices than economists had anticipated, stoking concerns about the Federal Reserve potentially delaying the start of its planned interest-rate cuts.

It showed that wholesale prices rose in January at the fastest rate in five months, gaining 0.3% while surpassing the 0.1% increase that economists polled by The Wall Street Journal had anticipated. Core wholesale prices, which exclude food, energy and trade margins, rose by an even larger 0.6%.

“Friday’s stronger-than-expected Producer Price Index suggests that inflation is stickier than many investors expected and this data, in addition to Tuesday’s strong Consumer Price Index, suggests that the Federal Reserve has very little reason to cut interest rates anytime soon,” said Clark Bellin, president and chief investment officer at Bellwether Wealth, in emailed commentary.

Treasury yields moved sharply higher after the PPI report, with the yield on the 10-year note
rising 8 basis points to move back above 4.30%. The ICE U.S. Dollar Index
also traded higher, rising 0.5% to 104.60.

U.S. stocks fell sharply following the CPI report earlier this week, with the S&P 500 booking its biggest drop in nearly a year. The magnitude of Friday’s downturn was far smaller so far.

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PPI wasn’t the only piece of economic data released on Friday. Investors also digested housing starts, which showed the construction of new homes fell 14.8% in January, as home builders scaled back new projects.

Next up, the University of Michigan preliminary consumer sentiment survey for February is due at 10 a.m.

Monthly options tied to U.S. stocks, ETFs and indexes expired or were set to expire on Friday, potentially injecting some additional volatility into markets, strategists warned.

Investors heard from Fed Vice Chair for Supervision, Michael Barr, who said regulators were focused on risks posed by banks’ commercial real-estate loans, early Friday. Later they will hear from San Francisco President Mary Daly at 12:10 p.m.

Technology stocks continued to march higher, helping to push the Nasdaq into an early lead, despite the index still trailing the S&P 500, Dow and small-cap Russell 2000 on the week.

Shares of Applied Materials Inc.

surged 13% in premarket trading after the chip-equipment company delivered upbeat results and guidance after Thursday’s close. Among other big sector names, shares of Tesla Inc.

rose 2% in premarket trade, with Nvidia Corp.

up 1.5%. Nvidia is expected to report fourth-quarterly results next week.

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