US: Stocks fall as inflation stands higher than expected
WALL Street stocks tumbled on Tuesday after US consumer inflation slowed less than expected in January, dampening hopes for quick interest rate cuts from the Federal Reserve.
The Consumer Price Index (CPI) rose 3.1 per cent from a year ago, while “core” inflation, stripping out volatile food and energy components, rose 3.9 per cent.
That’s a big improvement from the worst of the pandemic price surge, but still above the Fed’s two per cent target.
The Dow Jones Industrial Average finished down 1.4 per cent at 38,272.75, retreating from Monday’s record.
The broad-based S&P 500 fell 1.4 per cent to 4,953.17, while the tech-rich Nasdaq Composite Index dropped 1.8 per cent to 15,655.60.
US Treasury bond yields jumped as futures markets shifted bets against central bank rate cuts in March and May.
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The inflation report “just stretches out the whole process,” said Maris Ogg of Tower Bridge Advisors, who described the CPI reading as a “blip.”
“I don’t see any reason why the economy wouldn’t continue to do reasonably well,” Ogg said.
Prior to Tuesday’s losses, analysts had warned the market could be poised for a pullback after more than three months on the upswing.
The losses were broad-based, with all 11 sectors of the S&P 500 in the red. Somewhat deeper declines were experienced by consumer discretionary and real estate stocks.
Among individual companies, JetBlue bucked the tide of the broader market, surging almost 22 per cent after longtime billionaire investor Carl Icahn disclosed about a 10 per cent stake in the airline.
Marriott International fell 5.6 per cent after releasing a first quarter profit forecast that lagged analyst estimates. AFP
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