Stock Market Today: Dow Drops 613 Points After Hawkish Fed Talk
Stocks initially opened higher, but swung into negative territory around lunchtime.


Stocks started Wednesday trading higher thanks to another encouraging reading on inflation.
However, the major benchmarks couldn't sustain this early lead as dismal retail sales data stoked recession concerns and a Federal Reserve official threw support behind more interest-rate hikes.
Starting with the good news: The Labor Department this morning said its producer price index – which measures how much suppliers are charging businesses for goods – was up 6.2% year-over-year in December. This was down from November's 7.2% rise and was the lowest annual increase since March 2021. Core CPI, which excludes volatile energy and food prices, increased 4.6%, a slower pace of growth than what was seen in November. Month-over-month, headline PPI fell 0.5%, while core PPI rose 0.1%.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Today's PPI echoes what was seen in last week's consumer price index – that inflation is indeed easing as a result of the Federal Reserve's aggressive interest-rate hiking campaign. However, inflation is cooling because the Fed's rate hikes are slowing the economy. And this was seen in today's retail sales report. Specifically, the Commerce Department said retail sales were down 1.1% from November to December, marking a second consecutive monthly decline.
And while today's economic reports might have led investors to believe the Fed could ease up on the scale of future rate hikes, St. Louis Fed President James Bullard said earlier at a Wall Street Journal event that he expects the benchmark rate to reach 5.25% to 5.5% by the end of 2023. This compares to the current rate of 4.25% to 4.5%, and is above market expectations for the benchmark rate to reach no higher than 5.0%, according to CME Group.
At the close, the Dow Jones Industrial Average was down 1.8% at 33,296, the S&P 500 was off 1.6% at 3,928, and the Nasdaq Composite was 1.2% lower at 10,957.
The Best Commodity ETFs to Buy
Today's inflation update "represents another data point supporting the likelihood that producer prices have peaked from their apex last March at 11.7%, and are on their way down," says Greg Bassuk, CEO at asset management firm AXS Investments. "This is very good news for both Wall Street and Main Street, including because trends in producer prices typically seep down to consumers."
Still, inflation remains well above the Fed's 2% target, and "investors would be prudent to remain invested in inflation-sensitive assets," Bassuk adds. These assets include those found in cyclical sectors, like energy stocks and financials. They also include commodities, which have historically proven resilient amid rising prices. While the idea of engaging directly with commodity markets can be intimidating for some, the best commodity ETFs allow investors an easy way to gain exposure to the diverse asset class.

With over a decade of experience writing about the stock market, Karee Venema is an investing editor and options expert at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at Schaeffer's Investment Research. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.
-
Six Steps to Take if You've Recently Inherited Money From a Loved One
It’s important to deal with the emotional aspect first before tackling the financial one.
By Kiplinger Advisor Collective Published
-
Alaska Airlines to Buy Hawaiian: Get Bonus Miles Now
How to use the Alaska Airlines credit card and frequent flyer program to save on trips to Hawaii, Alaska and beyond.
By Ellen Kennedy Published
-
Is A Recession Looming? Two Big Bank CEOs See It That Way
Recession is likely, Citi's CEO told a Senate panel today, a sentiment echoed by JP Morgan's chief executive last week.
By Joey Solitro Published
-
Stock Market Today: Stocks Swing Lower as Oil Prices Retreat
A bad-news-is-good-news jobs report sent the main indexes higher at the open, but they didn't stay there for long.
By Karee Venema Published
-
Stock Market Today: Stocks Struggle, Apple Reclaims $3 Trillion Market Cap Mark
Apple quietly reclaimed the $3 trillion market cap level Tuesday amid a choppy day for the main indexes.
By Karee Venema Published
-
Stock Market Today: Stocks Slip to Start Jobs Week
Coming off a fifth straight weekly win, the main indexes took a breather ahead of a busy week of jobs data.
By Karee Venema Published
-
Stock Market Today: Stocks Swing Higher After Powell Speech
Fed Chair Powell poured cold water on potential rate cuts, but stocks jumped anyway.
By Karee Venema Published
-
Stock Market Today: Dow Jumps 520 Points After Salesforce Earnings
The enterprise network software firm reported impressive Q3 results, sending the blue chip stock soaring.
By Karee Venema Published
-
Stock Market Today: Stocks Give Back GDP Gains After Beige Book
The latest GDP report showed the U.S. economy grew at a rapid-fire rate in the third quarter, but the Fed's Beige Book sparked concerns.
By Karee Venema Published
-
More Signs of Belt-Tightening and a Slowing Economy: The Kiplinger Letter
The Kiplinger Letter Although fewer banks are tightening lending standards, more businesses and households are feeling the squeeze.
By Rodrigo Sermeño Published