The retail sector slumped on Thursday after the consumer price report for September showed an increase of 0.4% to indicate inflation is running hotter than anticipated. Core CPI rose 0.6% to 6.6%, also more than expected and topping the March peak. Notably, the core level is the highest in 40 years.
The probability of higher interest rates jumped immediately after the report with market odds of a 75-basis-point hike at the next Fed meeting in November now at 95%. Fed funds futures are now also pricing in a 75-point hike in December.
Investors seem to be fearing that high inflation and rising interest rates will cut into consumer discretionary spending.
Notable decliners in the apparel retail sector in Thursday morning trading included Rent the Runway (RENT) -4.15%, Lululemon (LULU) -3.85%, and Boot Barn (BOOT) -3.72%.
Online retailers Etsy (ETSY) -9.65%, Wayfair (W) -5.85%, Chewy (CHWY) -5.37%, and Overstock.com (OSTK) -5.05%. The biggest e-commerce name of all was also in decline with Amazon (AMZN) down 4.75%.
Target (TGT) fell 2.05% in early trading on Thursday and Costco (COST) shed 2.33%, while Walmart (NYSE:WMT) was standing relatively tall with just a 0.85% drop.
Dig into the details of the September CPI report.
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