A hotter-than-expected inflation figure triggered a choppy session on Tuesday, with the major U.S. equity averages eventually ending with a mixed performance. The Dow and S&P 500 finished in the red, while the Nasdaq posted a modest advance.
The Nasdaq Composite (COMP.IND) closed +0.6%, the S&P 500 (SP500) finished fractionally lower and the Dow (DJI) ended -0.5%.
After spending time on both sides of the unchanged mark, the S&P 500 eventually ended with a decline of 1.16 points, finishing at 4,136.13. The Nasdaq rose 68.36 points to close at 11,960.15, while the Dow slumped 156.66 points to conclude trading at 34,089.27.
Seven of the 11 S&P sectors pushed lower. Movement was generally muted, however, with only Real Estate falling more than 1%. On the upside, Consumer Discretionary climbed 1.2%, while Materials and Info Tech posted mild advances.
“CPI came in hotter than forecasts, which did not shock the market as oil and food prices stabilized last month,” Andrew Hecht told Seeking Alpha. “The core reading was also higher, and the recent jobs data sets the stage for the inflation-fighting Fed to continue pushing the Fed Funds Rate towards 5% at upcoming FOMC meetings.”
Hecht added: “The overall market reaction across all asset classes was not dramatic. We could see a delayed response over the coming sessions as the inflation hawks beat their drums and a highly uncertain geopolitical landscape hovers over the markets.”
Stocks showed wide swings early in the session, as investors metabolized consumer price statistics that came in above what economists were predicting. Trading stabilized in the afternoon, although the S&P 500 broke a two-day winning streak but edging just below the flat line in the final moments of the session.
Looking at the statistics, the consumer price index rose 0.5% in January compared to the previous month. This increase was sharper than the expected advance of 0.4%. On an annual basis, CPI rose at a 6.4% pace, while core prices, excluding the volatile food and energy sectors, showed a 5.6% increase from last year.
The release of the inflation data pushed Treasury yields higher. The 10-year Treasury yield (US10Y) climbed 4 basis points to 3.76%. The 2-year yield (US2Y) gained 9 basis points to 4.62%.
Looking at individual stocks, Palantir (PLTR) surged after its Q4 report included a strong forecast.