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Index Slides After Uptick in Wholesale Inflation

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Key Takeaways

  • The S&P 500 dropped 0.3% on Thursday, March 14, 2024, as the latest inflation data revealed a higher-than-expected rise in wholesale prices in February.
  • Shares of Lennar tumbled after the home builder reported mixed results, with high interest rates dragging down demand.
  • An uptick in crude oil prices helped drive outperformance by the energy sector, including gains for oilfield service provider Halliburton.

Major U.S. equities indexes moved lower amid additional indications that inflation remains persistent.

Thursday’s Producer Price Index (PPI) report showed that wholesale prices rose 0.6% month over month in February, accelerating from the previous month and outstripping economists’ forecasts. The data could influence Fed officials as they look for confirmation that inflationary pressures have subsided enough to begin cutting interest rates.

The S&P 500 and the Nasdaq dropped 0.3% on Thursday. The Dow was down around 0.4%.

Lennar (LEN) shares suffered the heaviest losses among S&P 500 stocks, plummeting 7.6% after the home builder reported mixed earnings results. Although profits for its fiscal first quarter topped expectations, revenue fell short as higher interest rates crimped demand and led Lennar to offer incentives to homebuyers.

The hot inflation reading and prospect that interest rates could remain higher for longer appeared to weigh on the rate-sensitive solar sector. Shares of solar firm Enphase Energy (ENPH) plunged 6.6%, extending steep declines posted earlier this week when Piper Sandler analysts cut their price target on the stock amid growth concerns. Shares of competitor FirstSolar (FSLR) slipped 5.5%.

Health care products firm West Pharmaceutical Services (WST) posted Thursday’s top performance on the S&P 500, with shares advancing 3.5%. The manufacturer of containment and delivery systems for injectable drugs has seen sustained strength in its proprietary products segment.

The energy sector outperformed as crude oil futures pushed higher again on Thursday, adding to price gains posted this week amid lower U.S. inventories and drone strikes on Russian refineries. Shares of oilfield service provider Halliburton (HAL) gained 3.0%.

Shares of Google parent Alphabet (GOOG) jumped 2.5% after big tech rival Microsoft (MSFT) told European antitrust regulators that Google enjoys a competitive edge in generative artificial intelligence (AI) thanks to its powerful chips and data. Microsoft shares were up 2.4%.

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