- US stocks dropped Tuesday after the January CPI report came in slightly higher than anticipated.
- Headline CPI cooled to 6.4% in January but was above expectations of 6.2%.
- The S&P 500 has gained for the past two trading sessions.
US stocks fell on Tuesday after the January CPI report showed stickiness in inflation, sustaining pressure on the Federal Reserve to keep interest rates at elevated levels.
A third straight win for S&P 500 was in question after stock futures were whipsawed following the first CPI report of 2023. Headline CPI eased to 6.4% year over year from December, but it was slightly higher than the 6.2% consensus estimate from Bloomberg.
Price increases for energy and food and rent drove the monthly reading up 0.5%. Core CPI which strips out energy and food prices rose 0.4% for the month.
“Perfect spoiler for Valentine’s day: markets were expecting (hoping, praying) to get further confirmation that a) peak is in and b) decline is at least steady, if not accelerating. This is critical for the disinflationary narrative and any hope for fed cuts this year. We got neither,” Jan Szilagyi, CEO of investment research firm Toggle AI, wrote in a note.
Here’s where US indexes stood at the 9:30 a.m. opening bell on Tuesday:
A “big culprit for persistent inflation is shelter – so focus will be on [Fed Chairman Jerome] Powell’s thesis that this should decline meaningfully into year end,” wrote Szilagyi. “If not, hiking cycle could be with us for a lot longer.”
Here’s what else is happening today:
In commodities, bonds, and crypto: