U.S. stocks traded lower on yesterday after a key inflation report showed a faster-than-expected rise in prices making it an almost certainty the Federal Reserve will have to raise interest rates significantly this year.

 

The Labor Department reported initial claims for state unemployment benefits fell 16,000 to a seasonally adjusted 223,000 for the week ended Feb. 5. Claims had jumped to a three-month high in mid-January as Omicron raged across the country.  But wage gains are being wiped out by inflation. Average weekly earnings adjusted for inflation fell 3.1% in January from a year earlier. According to economists at Moody's Analytics, inflation was costing the average America household over $250 per month or about $3,000/year.

 

Mortgage rates in the U.S. jumped to the highest level since January 2020, before the pandemic rocked financial markets.  The average for a 30-year loan was 3.69%, up from 3.55% last week, according to Freddie Mac. That was the highest since Jan. 2, 2020, when rates averaged 3.72%.

 

Share of both Coke and Pepsi are trading lower even though both companies beat analysts earnings expectations after both companies warned of cost pressures effecting their margins.