Wall Street Today | Indexes Retreat as Investors Digest Mon. and Tues. Inflation Data

Treasury yields jumped on Thursday, and indexes fell after data showed a bigger-than-expected jump in producer prices during February, keeping inflation worries alive. The market reversed from larger declines shortly before closing.

In data released on Thursday, the February producer-prices index jumped, suggesting inflationary pressures continue to percolate and may not ease as quickly as previously thought. Wholesale prices rose 0.6%, matching the largest gain since last August and coming in above the 0.3% median estimate of economists polled by The Wall Street Journal.

Meanwhile, retail sales rose 0.6% last month, or slightly less than the 0.8% gain that economists had expected. Separately, initial jobless-benefit claims dipped to 209,000 last week, indicating the labor market remains strong.

Traders priced in little chance that the Federal Reserve will reduce interest rates from the current range of between 5.25% and 5.5% next Wednesday or by May. However, according to the CME FedWatch Tool, the probability of a 25-basis-point rate cut by June was 56.9%.

"PPI was higher than expected but most of the increase came from energy, while the important services category slowed. It's not terrific news, but investors are giving inflation the benefit of the doubt for now. We can tolerate a hot reading today because we still have a couple of months to right the ship before the Fed's key June meeting," said David Russell, global head of market strategy at TradeStation in Plantation, Fla.

Gold prices settled lower on Thursday as the dollar and bond yields climbed amid hotter-than-expected US inflation.

Gold for April delivery closed down US$13.30 to settle at US$2,167.50 per ounce. The drop comes after the Bureau of Labor Statistics reported that the US producer price index rose 1.6% annualized rate in February, up from a revised 1% rate in January. The latest reading was well above expectations for a 1.1% rise, while the core rate rose 0.3% from January, ahead of the consensus estimate for a 0.2% rise, according to Marketwatch.

Oil demand is rising, and supply is constrained, lifting prices for the commodity to their highest levels in months. Shares of oil companies are also riding high.

West Texas Intermediate crude, the U.S. benchmark, was up 2%, to $81.29 a barrel on Thursday, on track to settle at its highest level of 2024. Brent crude, the international benchmark, was up 1.7%, to $85.42, after already closing at its highest level of the year on Wednesday. Oil's rise is contributing to rising inflation, too.

Tesla stock was falling on Thursday after a rough Wednesday that took the stock 3.4% lower to $163. The stock is the worst performer in the S&P 500 so far this year, falling a total 36%.