Futures sink as strong inflation data raises rate hike fears

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(Reuters) – U.S. stock futures fell more than 1 percent on Wednesday after data showed U.S. consumer prices rose more than expected in January, with core inflation posting its biggest gain in a year.

That again stoked fears that interest rates will increase faster than expected, raising U.S bond yields and further quelling investors’ interest in the stock market.

January’s fall in U.S. retail sales was the biggest monthly drop in almost a year, conversely also feeding into fears that the economy is not strong enough to swallow robust increases in borrowing costs.

The CPI data was “Stronger than expected, a little hot. It sort of feeds on investor fears of an economy running a little hot, that interest rates could rise and put pressure on equities,” Jack Ablin, chief investment officer at Cresset Wealth in Chicago.

“It’s feeding that fear that the labor market started about 10 days ago,” Ablin said, referring to a strong January jobs report on Feb. 2, which was…



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