us stock indexes fell thursday morning as investors digested another hot inflation report that showed price pressures at the wholesale level rose more than expected in january fueling concerns that the federal reserve will raise interest rates higher than expected on wednesday the dow jones industrial average rose 39 points or 011 to 34128 the sp 500 increased 11 points or 028 to 4148 and the nasdaq composite gained 110 points or 092 to 12071 equity indexes slid sharply on thursday morning as traders assessed the latest batch of mixed data on the us economy and hawkish comments from cleveland federal reserve bank president loretta mester after the january consumerprice index showed only slow progress in bringing inflation down inflation at the wholesale level also rebounded in january us wholesale prices jumped 07 to start the new year the biggest gain since last summer offering further proof that inflation is sticky and unlikely to decline rapidly a separate measure of wholesale prices that strips out volatile food and energy costs climbed a sharp 06 last month the largest increase in 10 months todays wholesale inflation data when coupled with the cpi report suggests that the easy battles against price pressures have been won we believe the move from 9 to 6 inflation level will prove to be much less challenging than the journey from 6 to 3 wrote john lynch chief investment officer at comerica wealth management in emailed comments however lynch said the stickierthanexpected inflation means the federal reserve is likely to remain steadfast in its fight against inflation with tighter policy and for longer than equity markets have been pricing in since october the strongerthanexpected wholesale inflation reading dented us stock indexes and sent yields on the 10year treasury note higher the ice us dollar index a measure of the currency against a basket of six major rivals rose 02 to 10411 on thursday see feds mester said she saw a compelling case for halfpoint hike at january meeting cleveland fed president loretta mester said in a speech following the release of the wholesale inflation report thursday that she would have liked the central bank to have been more aggressive at their last interestrate committee meeting in january and she had seen a compelling case for a halfpoint rate hike at that meeting when policy makers lifted the fedfunds rate by a quarter of a percentage point indeed at our meeting two weeks ago setting aside what financial market participants expected us to do i saw a compelling economic case for a 50basispoint increase which would have brought the top of the target range to 5 percent mester said mester did not have a vote at the jan 31 feb1 policy meeting the committee voted unanimously to raise its benchmark interest rate by 25 basis point to a range of 45 to 475 in recent sessions traders have absorbed data showing us inflation being stubbornly sticky and strong retail sales these follow a surprisingly strong jobs report at the start of the month considering these pricing developments with pressure on profit margins and interest rates investors should prepare for a retest of the october lows lynch said consequently benchmark us treasury yields are near their highest for 2023 yet the sp 500 index sits just shy of its best level since august having bounced 7 for the year to date an indication of how relaxed investors have become about the current market scenario can be seen in the level of the cboe vix index  a measure of expected sp 500 volatility and tends to jump when traders get anxious the index hovered near 18 ahead of the wholesale inflation data but advanced to 219 on thursday morning part of the reason for the declining vix is that the sp 500 has been meandering in a relatively tight range for the last 10 sessions noted mark newton head of technical strategy at fundstrat us equity markets are holding up far better than might be expected with treasury yields pressing higher this will be something to continue to watch carefully he said in a note to clients there remains a realistic threat of minor weakness into late february and this would be officially underway on spx break of 4060 though even weakness under 4095 would warn of this possibly getting underway conversely 4160 and also 4176 are the two areas to monitor on the upside newton added in other economic data construction on new us homes fell a seasonally adjusted 45 in january to 131 million the commerce department said thursday the drop in construction on homes follows the decline in december when housing starts also fell by 34 the number of americans who applied for unemployment benefits in stayed below 200000 for the fifth week in a row signaling the us labor market is still quite strong new applications slipped from to 194000 from a revised 195000 in the prior week the government said thursday