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US stocks continue lower following CPI, jobs reports

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US stocks continue lower following CPI, jobs reports

The US stock market took another hit Thursday, declining at its fastest rate in two months. The benchmark gauges were all dragged down following weak earnings from Cisco Systems (NASDAQ:CSCO) and Wal-Mart Stores Inc (NYSE:WMT) . Exacerbating the fall were reports on consumer inflation and last week’s jobless claims, which only served to fuel expectations for a Federal Reserve asset taper in September.

Cisco declined a whopping 7.17 percent after the equipment manufacturer said it would lay off 5 percent of its workforce, Share prices fell to $24.49, as several investment brokerages cut their price targets on Cisco stock. Wal-Mart declined more than 2.5 percent to $74.41 a share after the world’s largest retailer revised its profit forecasts following another disappointing quarter.

The Standard and Poor’s 500 declined more than 1.4 percent, as all major industries retreated. The technology sector took the biggest hit, with Google (NASDAQ:GOOG) , IBM (NYSE:IBM) and Hewlett-Packard (NYSE:HPQ) sustaining heavy losses. After putting up its biggest rally in six months, Apple Inc (NASDAQ:AAPL) avoided a sell off by consolidating closer to the $500 mark.

The benchmark S&P closed the New York day at 1,661.32. The NASDAQ Composite was down more than 1.7 percent to end the day at 3,606.12. The Dow Jones Industrial Average registered losses in the vicinity of 1.5 percent, falling to 15,112.20.

Stocks continued lower following Thursday’s report on consumer inflation. The annualized Consumer Price Index for July advanced 2 percent, in-line with the consensus. Month-on-month, this represents a gain of 0.2 percent. The cost of living has risen in each of the past three months, which supports the Federal Reserve’s inflation forecast. CPI excluding food and energy also met expectations, advancing 1.7 percent.

Last week’s jobless claims declined to their lowest level since 2007, stroking fears of an imminent Federal Reserve asset tapering in September. As inflation and employment continue to approach central bank targets, we are likely at the tail end of the Fed’s $85 billion asset purchase facility.

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