Inflation driven Dow plunge is worst in 11 months
Dow Jones Industrial Average posted its worst day in 11 months
Are markets sensing a 'nightmare' inflation scenario?
Forbes Media CEO Steve Forbes and Public Ventures President Lou Basenese react to stocks falling on a hotter-than-expected consumer price index.
U.S. stocks tumbled in a broad sell-off after a hotter-than-expected inflation report may jeopardize the Federal Reserve’s plan to cut interest rates.
The Dow Jones Industrial Average fell 524 points or 1.3%, trimming a deficit of over 700 points reached during the session. It was the worst trading day in 11 months.
The benchmark has erased almost half its gains for 2024 with the 10-year Treasury yield hitting 4.3%.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| I:DJI | DOW JONES AVERAGES | 38239.66 | +153.86 | +0.40% |
The consumer price index for January rose by 3.1% on an annual basis, higher than the 2.9% economists surveyed by Refinitiv expected. The producer price index, due Wednesday, will also be closely watched.
CONSUMER INFLATION FOR JANUARY COMES IN HOT
"We continue to expect the FOMC to leave the Fed funds rate unchanged at the March meeting and to begin the easing cycle in May," said Jan Hatzius, chief economist at Goldman Sachs, in a note to clients on Tuesday.
While over 91% of market participants agree with Hatzius, the majority, 62%, don't expect any move at the May meeting, according to the CME's Fed Watch Tool. Expectations for June are even more iffy, with just 24% expecting a cut.
JANUARY INFLATION BREAKDOWN: WHERE PRICES ARE RISING THE MOST
Dow Jones Industrial Average
The S&P 500 and Nasdaq Composite slid 1.4% and 1.8%, respectively.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| SP500 | S&P 500 | 5099.96 | +51.54 | +1.02% |
| I:COMP | NASDAQ COMPOSITE INDEX | 15927.900321 | +316.14 | +2.03% |
All 11 of the S&P's major sectors fell, with real estate, utilities and financials pacing the drop, while energy and health care companies fell the least.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| XLRE | SELECT SECTOR SPDR TRUST REAL ESTATE SELECT SECTOR S | 36.46 | +0.02 | +0.05% |
| XLU | UTILITIES SELECT SECTOR SPDR ETF | 66.19 | -0.73 | -1.09% |
| XLF | FINANCIAL SELECT SECTOR SPDR ETF | 40.80 | -0.10 | -0.23% |
| XLE | ENERGY SELECT SECTOR SPDR ETF | 95.74 | -0.89 | -0.92% |
| XLV | HEALTH CARE SELECT SECTOR SPDR ETF | 139.96 | +0.04 | +0.03% |
The surprise inflation report, which showed prices for about 19 items reignited in January, comes after President Biden celebrated the S&P 500 crossing the 5,000 level for the first time last week. It may present political challenges for Biden, who recently touted the market as part of his reelection campaign.
S&P 500 CLOSES ABOVE 5,000 FOR FIRST TIME
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