Friday Wrap - Inflation Data Pushes Stocks Lower

by: Roy Mehta

The Dow Jones Industrial Average fell 178.11 points (-1.32%), the Standard & Poor's 500 index lost 20.5 points (-1.37%), and the Nasdaq decreased 32.75 points (-1.23%). Volume on the NYSE was on par with the rest of the week at 1.31 billion shares, and decliners beat advancers by a ratio of about 7:2.

The CPI brought inflation issues to the forefront Friday, lessening the likelihood of further rate cuts. The consumer price index rose 0.8%, the biggest increase in more than two years, versus expectations of a 0.6% increase (full story). Core-CPI increased 0.3%, which was also higher than estimates. On the news, the dollar index (DYX) jumped 1.1%. The US 10-year Treasury fell 7/32 in price, pushing yields to 4.23%.

All sectors finished down Friday, with financials (-1.8%) and basic materials (-2.71%) showing considerable weakness. Crude fell $0.98 to $91.27/barrel. Citigroup (C, -1.0%) said late Thursday it will add seven SIVs to its books. The rescue will put a $49 billion strain on the company's balance sheet (full story). Black & Decker (BDK, -8.5%) lowered its forecast for the fourth quarter and the full year; shares hit a 52-week low (full story).

The Empire State Manufacturing Survey (8:30) will be released Monday. Look for the market to stay somewhat volatile with Housing Starts and GDP also being announced next week.

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