Inflation data caused the Dow Jones to slip on Tuesday.
The Dow dropped 500 points (at the time this article was written).
Stocks dropped on Tuesday after hotter-than-expected inflation data for January spiked Treasury yields and raised doubts that the Federal Reserve would be able to cut rates several times this year, a key part of the bull case for the equity market.
The Dow Jones Industrial Average lost 503 points, or 1.3%. The S&P 500 slid 1.4%, and the Nasdaq Composite fell 1.7%.
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.
It is on pace for its worst percentage loss in 2024.
Both headline and core inflation were more severe than economists predicted in January, according to the leading indicator of the consumer price index, causing the broad equity selloff with the deteriorating backdrop of equities’ previous rally in the face of easing inflation and potential interest rate cuts which would bolster the value of both stocks and bonds.
The Dow Jones Industrial Average fell 540 points, or 1.4%, shortly after market open, pacing toward its steepest percentage loss of the year.
The S&P 500 and tech-heavy Nasdaq’s 1.4% and 1.8% respective drops are each index’s second-worst days of 2024.
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