Wall Street stocks slide as rate cut hopes diminish

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Wall Street's main stock indices pulled back Friday after a slew of data this week dampened hopes for earlier rate cuts from the Federal Reserve, while European equities held near recent highs.

Oil and cryptocurrency bitcoin fell on profit taking after making strong gains earlier in the week.

Paris and Frankfurt ended little changed Friday and up sharply for the week, holding just below the record intraday highs they touched Thursday.

The shares gained on expectations that Europe's stuttering growth might enable the European Central Bank to start cutting interest rates this summer, even if the US Fed does not.

"We're seeing continued rotation out of US markets," said Chris Beauchamp, an analyst at IG.com.

"Recent inflation prints and economic data have added to the cautious outlook," he added.

But a potential ECB shift to earlier rate cuts seems to have lit a fresh fire under European stocks, Beauchamp said.

Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics, said the Norwegian and Swiss central banks could also cut rates in the coming weeks.

Even if neither country uses the euro, their moves would underscore that European monetary policy does not have to take its cue from the Fed.

In the United States, a sharper-than-expected jump in wholesale price data had sent US shares lower Thursday, with those inflation concerns carrying over into Friday.

All three main Wall Street indices retreated Friday, with the tech-heavy Nasdaq down 1.0 percent.

- Fed outlook -

"This week's inflation data reinforced ideas that the Federal Reserve could take longer to cut rates, and also raised concerns about the impact of both inflation and extended high borrowing costs on the economy," said Charles Schwab analyst Joe Mazzola.

Eyes next week turn to the Fed's two-day policy meeting, which will culminate in their next rate decision.

Thursday's surprisingly large bump in February's US producer price index followed hotter than expected consumer inflation earlier in the week.

While Fed officials are not expected to move on rates next Wednesday, their post-meeting statement will be scrutinized for hints of their thinking, with many -- including boss Jerome Powell -- having warned they will only cut when they're confident inflation is under control.

London fell slightly Friday, but Vodafone shares rose almost six percent after the UK-based telecoms company sold its Italian unit to Swisscom for eight billion euros ($8.7 billion).

In cryptocurrency trading Friday, bitcoin trended lower, after spiking on Thursday to an all-time high.

"After bitcoin was hitting all-time highs almost on an hourly basis in recent days, investors have been profit-taking," said Nigel Green, head of financial advisory firm deVere Group.

The unit has rocketed about 50 percent since mid-February as hopes of rate cuts weighed on the dollar.

Bitcoin has also benefited from surging interest caused by US authorities' decision to allow greater trading accessibility.

- Key figures around 2020 GMT -

New York - Dow: DOWN 0.5 percent at 38,714.77 points (close)

New York - S&P 500: DOWN 0.7 percent at 5,117.09 (close)

New York - Nasdaq Composite: DOWN 1.0 percent at 15,973.17 (close)

London - FTSE 100: DOWN 0.2 percent at 7,727.42 (close)

Paris - CAC 40: UP less than 0.1 percent at 8,164.35 (close)

Frankfurt - DAX: DOWN less than 0.1 percent at 17,936.65 (close)

EURO STOXX 50: DOWN 0.1 percent at 4,986.02 (close)

Tokyo - Nikkei 225: DOWN 0.3 percent at 38,707.64 (close)

Hong Kong - Hang Seng Index: DOWN 1.4 percent at 16,720.89 (close)