Stocks traded mostly lower Wednesday as U.S. retail sales and producer prices surged in January and bond yields traded at their highest levels in a year.
The Dow Jones Industrial Average rose 12 points, or 0.04%, to 31,535, the S&P 500 was down 0.28% and the tech-heavy Nasdaq slid 0.87%.
Retail sales last month jumped 5.3%, well above economists’ estimates for growth of 1.1%. Stripping out auto and gasoline sales, retail sales jumped 5.9%, according to the Commerce Department.
The yield on the 10-year Treasury rose to a 52-week high of 1.33% as investors continued to dump bonds amid signs of creeping inflation and the Federal Reserve’s commitment to keeping short-term lending rates anchored near zero.
U.S. producer prices, a measure of inflation at the wholesale level, rose 1.7% in past year, higher than estimates of 0.9% and up from 0.8% in December.
Improved vaccine rollouts, decreasing new case counts of the virus and expectations of more U.S. stimulus have some on Wall Street believing market sentiment has become too frothy.
Citigroup strategist Tobias Levkovich said U.S. stocks could pull back by 10% as “our current caution reflects several factors, including ebullient sentiment readings, stretched valuation levels and slipping earnings revision momentum.”
Stocks finished mixed Tuesday, with the Dow closing at a record high of 31,522, up 0.2%. The S&P 500 and Nasdaq ended the session lower amid the surge in bond yields. Stocks of energy companies rose as a deep freeze in Texas boosted power and fuel demand.
Brent crude oil, the global benchmark, traded above $64 a barrel Wednesday as the cold snap in the South forced the shutdown of U.S. refineries and oil wells, and as Saudi Arabia said it would boost oil output in the coming months.
Verizon (VZ) – Get Report and Chevron (CVX) – Get Report were rising Wednesday after Warren Buffett’s Berkshire Hathaway BRK.A disclosed in regulatory filings that it acquired significant stakes in both companies. Berkshire Hathaway also trimmed its stake in Apple (AAPL) – Get Report by about 6%.