Stock Market LIVE: Sensex erases gains to trade flat, Nifty holds 23000; pharma index up 1.6%https://t.co/hSDVrWY1Y1
— ET NOW (@ETNOWlive) February 13, 2025
The stock market tumbled on Wednesday as a hotter-than-expected inflation report for January raised concerns that the Federal Reserve may keep interest rates higher for longer. The Dow Jones Industrial Average dropped 225 points, or 0.5%, while the S&P 500 slipped 0.3%. The tech-heavy Nasdaq Composite managed to eke out a small gain of 0.03%.
The Consumer Price Index (CPI) showed that headline inflation rose 0.5% in January, putting the annual rate at 3%. Core prices, which exclude food and energy costs, increased 0.4% for the month and 3.3% over the past year. Both figures were higher than economists had predicted.
Stock Market LIVE: Sensex, Nifty turn erase gains to trade in red; pharma index up 1.5%https://t.co/hSDVrWY1Y1
— ET NOW (@ETNOWlive) February 13, 2025
Yes, the hot inflation report hurt stocks today, but the calendar right now isn't doing anyone any favors either.
Talking about it all with @jsadinolfi of @MarketWatch. https://t.co/b94FFIEqVM
— Ryan Detrick, CMT (@RyanDetrick) February 13, 2025
The unexpected inflation data led investors to pare back their bets on potential interest rate cuts by the Fed later this year. The yield on the 10-year Treasury note, a key benchmark for many loans, surged to a session high of 4.66% following the report. “The hotter than expected CPI confirms investors’ anxiety regarding too-hot inflation that will keep the Fed on the sidelines,” said Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute.
Stock market reacts to inflation jump
Fed Chairman Jerome Powell, testifying before Congress on Wednesday, acknowledged that the central bank has made “great progress” in bringing inflation closer to its 2% target but noted that it is “not quite there yet.”
Some sectors and individual stocks managed to buck the downward trend. Quantum computing stocks, such as IBM and Google parent Alphabet, soared as traders bought the dip.
CVS Health shares jumped more than 16% after the company beat Wall Street’s expectations for its fourth-quarter earnings. However, small-cap stocks, as measured by the Russell 2000 index, saw outsized losses, dropping nearly 0.8% on the day. Consumer shares and bank stocks also retreated on concerns about slower spending and a weaker economy.
In other news, the New York Stock Exchange announced that one of its electronic exchanges, NYSE Chicago, will reincorporate in Texas and be renamed NYSE Texas. The move signals a potential competition to become the leading stock exchange in the Lone Star State. Despite the day’s losses, some analysts believe that the path of interest rates remains uncertain.
“While risk markets can go higher, it will be a choppier trajectory than the last two years,” Samana said.
