The stock market saw declines on Wednesday as hotter-than-expected consumer price index data rekindled inflation concerns, leading to a spike in interest rates. The Dow Jones Industrial Average dropped 225.09 points, or 0.5%, to close at 44,368.56. The S&P 500 slipped 0.27% to end at 6,051.97.
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 NASDAQ Composite managed a slight gain of 0.03%, finishing at 19,649.95. The January consumer price index rose by 0.5% for the month, setting the annual inflation rate at 3%. Both figures exceeded economists’ expectations of 0.3% and 2.9%, respectively.
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
Excluding food and energy prices, core CPI increased by 0.4% month-over-month and 3.3% for the year, again surpassing forecasts.
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
Sameer Samana, head of global equities and real assets at the Wells Fargo Investment Institute, commented, “The hotter-than-expected CPI confirms investors’ anxiety regarding too-hot inflation that will keep the Fed on the sidelines, as opposed to cutting rates.”
The benchmark 10-year Treasury yield rose to a session high of 4.66% following the inflation report. Shares of major technology companies and consumer and bank stocks fell due to concerns about higher operating costs and a potentially weaker economy.
Inflation spike revives market concerns
Despite the broader market downturn, CVS saw its stock rise by nearly 16%, marking its best performance since October 1999. The surge followed better-than-expected fourth-quarter earnings.
Conversely, Zillow’s shares fell by 10% due to weak first-quarter guidance, and Hertz Global Holdings saw an 8% drop after reporting a fourth-quarter net loss of $2 billion. Powell, testifying before the House Committee on Financial Services, noted that the latest CPI data reminds us of the progress made towards taming inflation. However, he cautions that there is still work to be done. He emphasized the Federal Reserve’s commitment to maintaining restrictive monetary policies.
Elsewhere, Professor Jeremy Siegel of Wharton School voiced caution regarding the continued strong performance of the “Magnificent Seven” tech companies. He hinted at the potential for other sectors to outperform once the market environment shifts. In geopolitical developments, the White House indicated that President Trump might announce reciprocal tariffs on imports soon, ahead of his meeting with Indian Prime Minister Narendra Modi.
Finally, the New York Stock Exchange announced that its electronic exchange, NYSE Chicago, will be relocating to Texas, marking a significant move to align with the state’s pro-business environment.
