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Wall Street closes lower as economic data raises long-term inflation threat

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  • U.S. consumer prices post largest annual rise since 1990
  • Tesla rival Rivian Automotive surges in market debut
  • Disney results expected

NEW YORK, Nov 10 (Reuters) - Wall Street ended the session in negative territory on Wednesday as investor risk appetitive was curbed by surging consumer prices, which stoked worries of a protracted wave of hot inflation.

All three major U.S. stock indexes lost ground, extending their losses throughout the trading day and adding to Tuesday's sell-off which snapped the S&P 500's and Nasdaq's eight-session runs of all-time closing highs.

"It's not surprising that after what was truly a historic run for the market to take a pause," said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky. "But we do think there are enough tailwinds heading into year-end to move the market higher."

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The Labor Department's consumer price index (CPI), delivered a hotter-than-expected jump of 0.9% and the fastest year-on-year gain in 31 years. read more

The report hinted that the persistently tangled global supply chain could result in the current inflation wave taking longer to abate than many - including the U.S. Federal Reserve - had hoped.

"The inflation story is really the driver that drives all things," Mayfield added. "It will affect Fed policy and fiscal policy, it's the driver of interest rates. It's hard to talk about anything but inflation."

And Gregory Daco, chief economist of Oxford Economics, believes this report means current price spikes have some staying power.

"I think things will continue to get worse before they get better in terms of the inflation outlook because we don't see core inflation peaking until sometime in early 2022," Daco said.

The graphic shows core CPI along with other indicators and where they stand relative to the Fed's average annual 2% inflation target.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 20, 2021. REUTERS/Brendan McDermid
Inflation

The CBOE Volatility index (.VIX) a gauge of investor anxiety, touched its highest level in nearly one month.

Unofficially, the Dow Jones Industrial Average (.DJI) fell 241.69 points, or 0.67%, to 36,078.29, the S&P 500 (.SPX) lost 38.54 points, or 0.82%, to 4,646.71 and the Nasdaq Composite (.IXIC) dropped 264.41 points, or 1.66%, to 15,622.13.

Tech (.SPLRCT) weighed heaviest on the S&P 500, with megacaps Apple Inc (AAPL.O) and Microsoft Corp (MSFT.O) among the biggest drags.

Third-quarter earnings season has reached the final stretch, and of the companies having reported, 81% have beaten street expectations.

Walt Disney Co (DIS.N) is expected to post quarterly results after the bell.

Tesla Inc (TSLA.O) reversed several sessions of declines in the wake of CEO Elon Musk's polling Twitter users on whether he should sell 10% of his stake in the company he founded.

This comes as rival electric vehicle maker Rivian Automotive Inc (RIVN.O) surged in its debut as a publicly traded company in an offering expected to raise nearly $107 billion. read more

Shares of retail trading platform Robinhood Markets Inc (HOOD.O) added to their losses two days after the company reported a security breach affecting 5 million customers. read more

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Reporting by Stephen Culp; additional reporting by Karen Pierog in New York, and Shreyashi Sanyal and Devik Jain in Bengaluru; editing by Diane Craft

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