A stronger-than-expected sign of inflation set off a choppy session on Tuesday, with major US stock averages eventually ending with a mixed performance. The Dow and S&P 500 ended in the red, while the Nasdaq posted modest gains.
The Nasdaq Composite (COMP.IND) closed +0.6%the S&P 500 (SP500) finished slightly lower and the Dow (DJI) term -0.5%.
“CPI came in higher than forecasts, which did not surprise the market as oil and food prices stabilized last month,” Andrew Hecht told Seeking Alpha. “The core reading was also higher, and recent jobs data sets the stage for the inflation-fighting Fed to continue to push the fed funds rate toward 5% at upcoming FOMC meetings.”
Hecht added: “The general market reaction across all asset classes was not dramatic. We could see a delayed response in the coming sessions as inflation hawks beat their drums and a highly uncertain geopolitical landscape looms over markets.” “.
Stocks showed big swings early in the session as investors metabolized consumer price statistics that beat economists’ predictions. Trading stabilized in the afternoon, though the S&P 500 snapped a two-day winning streak but fell just below flatline late in the session.
Looking at the statistics, the Consumer Price Index rose 0.5% in January compared to the previous month. This increase was stronger than the expected advance of 0.4%. On an annual basis, the CPI increased at a rate of 6.4%, while core prices, excluding the volatile food and energy sectors, showed a 5.6% increase over last year.
The release of inflation data pushed Treasury yields higher. The 10-year Treasury yield (US10Y) rose 4 basis points to 3.76%. The 2-year yield (US2Y) gained 9 basis points to 4.62%.
As for individual stocks, Palantir (PLTR) rose after its fourth quarter report included a strong forecast.
