US stocks open lower as producer prices rise more than expected

WALL Street stocks slid on Friday (Dec 9) after producer prices in the United States came in stronger than expected, fuelling uncertainty on whether red-hot inflation will continue easing.

Shortly after trading began, the Dow Jones Industrial Average fell 0.2 per cent to 33,713.50.

The broad-based S&P 500 dipped 0.3 per cent to 3,953.36, while the tech-rich Nasdaq Composite Index lost 0.3 per cent to 11,045.39.

The losses came after the Labor Department reported that producer prices rose 0.3 per cent in November, slightly more than economists expected.

“The numbers themselves weren’t mean so to speak. They were simply less friendly than what market participants had hoped they would be,” said Patrick O’Hare of Briefing.com.

“The key takeaway from the report is that it will pique concerns about next week’s Consumer Price Index not being as friendly as expected either, which in turn will keep the market on edge,” he added.

Although the annual producer price index came in at 7.4 per cent, lower than October’s reading and the same period last year, investors remained nervous over the elevated figure.

Prices are “still rising at a pace that is well above target,” added Rubeela Farooqi of High Frequency Economics in an analysis.

But with producer costs appearing to have peaked, some maintain that the data support a slower pace of interest rate hikes by the Federal Reserve, which has thus far waged an all-out battle in trying to rein in prices.

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Among individual companies, activewear brand Lululemon plunged more than nine per cent after reporting a weaker outlook for the fourth quarter. AFP