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The Dow dropped by 225 points Wednesday afternoon as the latest inflation data was higher than expected. The report comes as the ongoing tariff war has already raised fears among investors about higher inflation, as this means there is a lesser chance that the Fed would slash the interest rate this year.
In the afternoon, the Dow Jones Industrial Average was 225 points or 0.5% down. The tech-heavy Nasdaq recovered slightly, adding 0.03%, while the S&P 500 dipped 0.2%. Meanwhile, the 10-year Treasury yield climbed above 4.6%.
The Bureau of Labor Statistics reported Wednesday that the Consumer Price Index (CPI) increased by 0.5% last month, following a 0.4% rise in December. This increase was higher than the 0.3% that Wall Street had anticipated, according to estimates compiled by FactSet (FDS-0.34%). Additionally, the CPI rose by 3% compared to the previous year, surpassing expectations.
Core inflation, excluding volatile food and energy, increased 0.4% in January, the BLS said, while analysts had expected a 0.3% increase compared to a month earlier. Year-over-year, core inflation rose 3.3%, while analysts had expected core inflation to fall to 3.1% from 3.2%.
“Today’s data reaffirms Powell’s decision to put rate cuts on the back burner for an extended period of time,” Charlie Ripley, Senior Investment Strategist for Allianz Investment Management (ALV+0.19%), told Quartz in an email.
“Overall, today’s inflation data should force market participants to re-think the Fed’s ability to cut rates this year, especially considering the rise in prices is likely unrelated to any tariff activity from the White House.”
Robinhood is up, Reddit is down
Robinhood (HOOD+5.43%) reported earnings after the market closed, leading to a 13% increase in its shares. The trading platform exceeded expectations, with sales rising by 115% year over year.
In contrast, shares of social media giant Reddit (RDDT+0.91%) fell sharply after-hours as the company missed analysts’ expectations.
Earlier in the day, shares of chipmaker Super Micro Computer (SMCI+2.98%) rose after reporting earnings a day earlier. CVS Health Corporation (CVS+16.25%) also jumped after announcing earnings that exceeded analysts’ expectations.
– William Gavin contributed to the article
