Stocks lose their luster as tame inflation points to weak economy.
The U.S. stock market declined on Wednesday, as investors analyzed the latest batch of inflation data that seemed to show a broad cool down in the economy.
All of Wall Street’s major indices headed for losses on Wednesday. The Dow Jones Industrial Average (NYSEARCA:DIA) declined 43.27 points, or 0.2%, to close at 26,005.24.
The broad S&P 500 Index (NYSEARCA:SPY) fell 0.2% to 2,879.85, with losses primarily concentrated in energy and financials stocks.
Meanwhile, the technology-focused Nasdaq Composite Index (NYSEARCA:QQQ) closed down 0.4% at 7,792.72.
A measure of implied volatility known as the CBOE VIX (NYSEARCA:VXX) hovered within a narrow range on Wednesday, signaling the continuation of calm trading conditions on Wall Street. The so-called “fear index” flat-lined at 15.98 on a scale of 1-100 where 20-25 represents the historic average.
On the commodities front, oil prices declined sharply on Wednesday after U.S. government data showed a surprise build in commercial crude inventories.
U.S. West Texas Intermediate (WTI) futures fell $2.24, or 4.2%, to $51.03 a barrel on the New York Mercantile Exchange. Brent crude, the international benchmark, declined $2.42, or 3.9%, to $59.87 a barrel.
In economic data, U.S. consumer inflation weakened more than expected last month due to falling gasoline and used-vehicle prices. The consumer price index (CPI) weakened to 1.8% annually in May, down from 2% the month before, the Department of Labor reported Wednesday.
So-called core inflation rose 2% annually, official data showed.
The Final Word: Tame inflation gives the Federal Reserve even more leeway to begin lowering interest rates. According to Fed Fund futures prices, the central bank will start lowering interest rates as early as next month.