Inflation Data Spurs Market Sell-Off, Dampening Rate Cut Hopes
Summary
Hotter-than-expected inflation data stoked concerns among investors, leading to a decline in stocks and a surge in bond yields. The Federal Reserve's likelihood of cutting interest rates this year diminished, and the dollar strengthened against other currencies.
Market Performance
* S&P 500: -0.7%
* Nasdaq 100: -0.5%
* Dow Jones Industrial Average: -1%
* 10-Year Treasury Yields: +11 basis points to 4.65%
* Bloomberg Dollar Spot Index: +0.3%
Key Points
* Monthly inflation reached its highest since 2023 in January.
* Fed Chair Jerome Powell indicated that inflation remains elevated despite recent progress.
* Money markets now anticipate the first and only Fed rate cut in December 2025.
* Wall Street analysts warn that prolonged inflation could hinder the Fed's ability to cut rates this year.
* Some analysts predict that the Fed's next move may be a rate hike rather than a cut.
* Market analysts recommend caution and emphasize the potential impact on "higher-for-longer" inflation scenarios.
Corporate Highlights
* Kraft Heinz plans to compete in the inflation-sensitive market by discounting key items and investing in marketing.
* DoorDash's resilient demand outlook indicates continued consumer spending.
* CVS Health's strong earnings boost investor confidence.
* Spirit Airlines rejects Frontier's revised acquisition offer.
* Biogen's annual sales forecast disappoints, dimming its 2024 performance.
Upcoming Events
* Eurozone industrial production (Thursday)
* US initial jobless claims, PPI (Thursday)
* Eurozone GDP (Friday)
* US retail sales, industrial production, business inventories (Friday)
* Fed's Lorie Logan speaks (Friday)
Data Highlights
* Bitcoin: -0.9% to $95,480.79
* Ether: -1.1% to $2,592.66
* West Texas Intermediate crude: -1.6% to $72.17 per barrel
* Spot gold: -0.2% to $2,892.54 per ounce