WALL Street stocks retreated on Friday after a bigger than expected increase in wholesale prices poured cold water on hopes that the Federal Reserve would cut interest rates soon.

The Dow Jones Industrial Average ended 0.4 per cent down at 38,627.99, while the broad-based S&P 500 Index lost 0.5 per cent to 5,005.57.

The tech-rich Nasdaq Composite Index dropped 0.8 per cent at 15,775.65.

The slide came after US wholesale prices increased more than anticipated, gaining 0.3 per cent in January on higher services costs.

“Inflation concerns continued to drive Fed rate cut expectations lower and Treasury yields higher ahead of the weekend as import prices and the latest (Producer Price Index) release both came in quite hot,” said Oxford Economics lead analyst John Canavan in a note.

While Oxford Economics expects that the wholesale inflation data is unlikely to change the Fed’s planned path for rate cuts this year, it added in a separate report that those calling for a quick drop in rates will probably be disappointed.

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US Treasury yields, which can act as a proxy for interest rate expectations, rose on Friday.

The 10-year Treasury yield rose to around 4.3 per cent, while the two-year yield exceeded 4.6 per cent.

On Tuesday, stocks fell sharply after data showed that consumer inflation remained higher than hoped. But they bounced back in the last two days.

Among individual companies, Coinbase added 8.8 per cent after reporting a US$273 million profit in the fourth quarter, up from a US$557 million loss in the year-ago period.

Sports giant Nike closed the day 2.4 per cent lower on plans to trim two per cent of its workforce as part of a cost-cutting drive. AFP