U.S. Stocks Open Lower as Inflation Data Surpasses Expectations and Carvana Plunges 20.5%

U.S. stocks opened sharply lower on Friday as investors reacted to hotter-than-expected inflation data from the Federal Reserve’s preferred gauge.[0] The Personal Consumption Expenditures (PCE) price index rose 0.6% in January for a year-over-year rate of 5.4%.[1] Core PCE prices, which exclude food and energy, increased 0.6% in January, rising 4.7% from a year ago.[2] At 9:47 a.m., the Nasdaq 100 (NDX), S&P 500 (SPX), and Dow Jones Industrial Average (DJIA) had respectively declined by 1.9%, 1.6%, and 1.4[3]

Separate data showed the University of Michigan’s consumer sentiment index rose 3% from January to February to 67, confirming a previously released preliminary report.[4] The report stated that the rise was a result of “improvement in the short-run economic outlook,”, however consumers still “continued to exhibit considerable uncertainty over short-run inflation.”.[5]

At 10 a.m., traders will be anticipating the release of new home sales data.[6] According to a poll of economists conducted by the Dow Jones, it is expected that new home sales have increased by 0.6% in January.[6] The previous month saw a 2.3% increase, which is a lower rise than this one.[6]

In single-stock news, Carvana (CVNA) plummeted 20.5% after the online auto dealer reported a sharp year-over-year decline in units sold (-23%) and revenue (-24%) in Q4.[7] The CVNA stated that it will be able to decrease operating costs by one billion dollars by the end of the 2nd quarter, without any personnel reductions.[5] “We expect these expense reductions to be broad-based across all large SG&A expense components, but importantly, we do not expect a reduction-in-force to be part of this plan,” Carvana said in a letter to shareholders.[5]

Prior to the start of the market, Adobe (ADBE) experienced a decrease of more than 3% in its stock prices after Bloomberg News reported that the U.S. Justice Department is set to launch an antitrust lawsuit in order to halt the company’s takeover of Figma.[7] In pre-market trading, Moderna (MRNA) saw a decline of more than 2% following SVB Securities’ downgrade of the stock from ‘market perform’ to ‘underperform’.[8] Autodesk (ADSK) experienced a decrease of over 4% in pre-market trading following a prediction of 2024 billings to be between $5.03 billion and $5.[9]

0. “US stocks open sharply lower. Yields sharply higher” ForexLive, 24 Feb. 2023, https://www.forexlive.com/technical-analysis/us-stocks-open-sharply-lower-20230224/

1. “Dow Jones Dives 500 Points On Hot Inflation Report; Tesla Stock Skids Below $200” Investor’s Business Daily, 24 Feb. 2023, https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-fall-200-points-ahead-of-key-inflation-report/

2. “U.S. stocks open sharply lower after hotter-than-expected inflation reading” MarketWatch, 24 Feb. 2023, https://www.marketwatch.com/story/u-s-stocks-open-sharply-lower-after-hotter-than-expected-inflation-reading-b88521c8

3. “Stock market news today: Dow falls 349 points after hot inflation data” Markets Insider, 24 Feb. 2023, https://markets.businessinsider.com/news/stocks/stock-market-news-inflation-data-pce-fed-interest-rates-economy-2023-2

4. “So Long, Losing Streak? Stocks, Yields Climb as Market Mulls Fed Minutes, Hot Jobs Data, GDP – Ticker Tape” The Ticker Tape, 23 Feb. 2023, https://tickertape.tdameritrade.com/market-news/so-long-losing-streak-stocks-yields-climb-as-market-mulls-fed-minutes-hot-jobs-data-gdp-19400

5. “Stock Market Today: Hot Inflation Data Sinks Stocks” Kiplinger’s Personal Finance, 24 Feb. 2023, https://www.kiplinger.com/investing/stocks/stock-market-today-022423-hot-inflation-data-sinks-stocks

6. “Stocks close lower Friday after hot inflation report; major averages log worst week in 2023: Live updates” CNBC, 24 Feb. 2023, https://www.cnbc.com/2023/02/23/stock-market-today-live-updates.html

7. “S&P 500 set for biggest weekly loss this year as hot inflation stokes Fed fears By Investing.com” Investing.com, 24 Feb. 2023, https://www.investing.com/news/stock-market-news/sp-500-on-track-for-worst-loss-this-year-as-redhot-inflation-stokes-fed-fears-3014423

8. “Stocks Tumble as Strong Economic Reports Bolster the Case for Tighter Fed Policy” Barchart, 24 Feb. 2023, https://www.barchart.com/story/news/14527214/stocks-tumble-as-strong-economic-reports-bolster-the-case-for-tighter-fed-policy

9. “Markets Today: Stock Indexes Fall as PCE Inflation Accelerates” Barchart, 24 Feb. 2023, https://www.barchart.com/story/news/14522916/markets-today-stock-indexes-fall-as-pce-inflation-accelerates