Table of Contents
Stock Market Is Down
Stocks dropped on Tuesday after hotter-than expected inflation data om January spike and doubts were raised that Federal Reserves would cut rates several times this year.
The Dow Jones Industrial Average lost 524.63 points or 1.35%, to close at 38,272.75 in its worst season since March 2023 on it its percentage basis the 30-stock index sunk 757.52 points, or 1.95%. The S&P 500 slid 1.37% to close at 4,953.17, while the Nasdaq Composite fell 1.8% to settle at 15,655.60.
The Russell 2000 also suffered, tumbling nearly 4% for its worst season since June 2022.
The consumer price index rose 0.3%
in January from December. CPI was up 3.1% on an annual basis. Economists polled by Dow Jones expected CPI to have increased by 0.2% month over month in January and 2.9% from a year earlier.
Core prices, which exclude volatile food and energy components, rose 0.4% month over month and 3.9% from a year ago. Core CPI was expected to have increased 0.3% in January and 3.7% from a year earlier, respectively.
“This may well come as an easy excuse to take some of the froth out of the top of this market that’s been universally higher thus far this year,” said Art Hogan, chief market strategist at B. Riley Financial. “The CPI was, as reported today, just a touch hotter than expectations and proof positive that we’re not on a linear path, but we’re on a path headed lower.”
The 2-year Treasury yield jumped above 4.66%, and the 10-year yield topped 4.32% following the CPI data. Tech shares including Microsoft and Amazon which have steered the market run to record highs as rates declined, led the losses in trading Tuesday. Microsoft and Amazon each lost more than 2%.
In corporate news, JetBlue Airways spiked almost 22% after activist investor Carl Icahn reported a nearly 10% stake in the airline. Toymaker Hasbro lost 1.4% after missing analyst expectations for the fourth quarter. Shares of Avis Budget Group slipped about 23% on the back of disappointing fourth-quarter revenue.
But it’s still just one data point, which followed months of encouraging trends where inflationary pressures eased, said Chris Larkin, managing director, trading and investing, at E-Trade from Morgan Stanley.
“Until proven otherwise, the longer-term cooling inflation trend is still in place,” he said. “The Fed had already made clear that rate cuts weren’t going to happen as soon as many people wanted them to. Today was simply a reminder of why they were inclined to wait.”
The reaction across Wall Street was immediate and fierce.
Even after the surprising inflation report, the likeliest outcome is still for the economy to manage a perfect landing and avoid a painful recession as inflation cools, according to Alexandra Wilson-Elizondo, co-chief investment officer of the multi-asset solutions business in Goldman Sachs Asset Management.
Earlier, traders were forecasting as many as six cuts in 2024. Now, they’re largely betting on three or four cuts. Critics have been warning that stock prices may have climbed too far, too fast given too-optimistic hopes for rate cuts and other risks. On the upside for markets recently, most companies have been beating analysts’ forecasts for profits in the latest quarter.
Moody’s tumbled 7.9% for the worst loss in the S&P 500 after the credit-rating company reported weaker profit for the latest quarter than Wall Street had forecast.
All told, the S&P 500 fell 68.67 points to 4,953.17. The Dow dropped 524.63 to 38,272.75, and the Nasdaq sank 286.95 to 15,655.60.
In stock markets abroad, indexes fell across Europe. In Asia, markets were closed in China for holidays, but Japan’s Nikkei 225 jumped 2.9% and South Korea’s Kospi gained 1.1%.
Credit – Above news about stock market has been covered from CNBC news and AP news.
Also Check :
