The stock market weakened in afternoon trading, as April's inflation rate came in higher than expected. Energy stocks gained as oil prices resumed their climb.
Indexes have been weakening since about 11:30 a.m. ET. The Nasdaq composite fell 1.9%. The S&P 500 was down 0.7%. The Dow Jones Industrial Average dipped 0.4%. The small-cap Russell 2000 lost 1.5%.
On the Dow, Apple slid 3% and Microsoft fell 2.2%. But IBM climbed back above its 200-day moving average.
Volume fell on the NYSE and Nasdaq compared with the same time on Tuesday.
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The S&P Energy Select ETF led S&P sectors with a 3.6% gain, finding support at the 50-day moving average. The price of U.S. crude oil jumped more than 6% to $105.84 a barrel.
Big Oil stocks gained. Exxon Mobil was up 3.3%. Chevron gained 2.7%. BP was up 2.2% and Shell gained 3%.
Suncor jumped 5%, a day after the Canadian oil company reported earnings per share that soared 291% to $1.93, well above expectations for $1.27 per share.
Inflation Comes In Higher Than Expected
The consumer price index rose 8.3% in April from a year ago, easing from 8.5% the previous month. The CPI climbed 0.3% from the prior month, the Labor Department said. Economists expected CPI to rise 0.2% on the month and at an 8.1% annual rate.
The core CPI, which strips out food and energy prices, rose 0.6% from March. The annual core inflation rate fell to 6.2% after rising 6.5% the previous month, which was the highest since August 1982. Forecasts were for core CPI to increase 0.4% from February and 6% from a year ago.
"The inconvenient truth is the Fed is going to need to raise rates more quickly and to a higher level than many were hoping," Chris Zaccarelli, chief investor officer of Independent Advisor Alliance, said in a memo to investors this morning. "There will be at least four half-point rate hikes this year and not three or less and we would continue to be cautious with risk assets.
Sal Guatieri, senior economist at BMO Capital Markets, said underlying inflation re-accelerated in April, which forces the Fed to stay on an aggressive tightening path. Of concern, he added, the core rate is again rising at a strong 0.5%-0.6% pace, or a roughly 7% annualized clip.
Trade Desk, Boot Barn Gain On Earnings
Trade Desk reported March-quarter earnings and revenue that topped analyst estimates as internet TV drove advertising growth. TTD stock lost 1.4% as guidance came in a bit short of analysts expectations.
Trade Desk earnings were 21 cents per share, up 50% from a year earlier. Revenue rose 43% to $315 million. A year earlier, Trade Desk earnings were 14 cents a share on sales of $220 million. Analysts expected Trade Desk earnings of 15 cents a share on sales of $305 million for the period ended March 31. Trade Desk forecast June-quarter revenue of $364 million.
Boot Barn jumped 2.2% after it reported earnings that beat analysts' forecasts for both earnings and sales. The Irvine, Calif.-based footwear and apparel retailer said it earned $1.47 a share on sales of $383 million. Analysts expected EPS of $1.31 on sales of $354 million. The stock is gaining support at its 50-day line as it tries to form a new base.
Two video game companies, Roblox and Unity Software, delivered disappointing results late Tuesday. Unity stock tumbled Wednesday, but Roblox stock jumped 10%.
San Mateo, Calif.-based Roblox lost 27 cents a share on bookings of $631.2 million in the March quarter. Analysts polled by FactSet expected it to lose 22 cents a share on bookings of $655.7 million. Roblox reported healthy growth in users and usage of its online video game and social platform in the March quarter. But bookings fell 3% year over year and missed estimates.
Stocks Break Lower On Inflation — This Should Worry You
Duke Realty Rejects Prologis Buyout Offer
San Francisco-based Unity lost an adjusted 8 cents a share on sales of $320.1 million in the first quarter. Wall Street had predicted a loss of 8 cents a share on sales of $320.8 million.
Duke Realty on Wednesday rejected the $23.7 billion unsolicited buyout offer from Prologis as insufficient.
"We believe the latest offer, virtually unchanged from its prior proposals, is insufficient in that regard," Duke Realty said in a statement. Duke Realty shares jumped 7.7%, and Prologis shares traded up 0.5%.
Innovator IBD 50 ETF was flat, dragged down by health care stocks. Several energy and fertilizer stocks in the index gained.
Follow Michael Molinski on Twitter @IMmolinski