US stocks fall after inflation cools less than anticipated

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US stocks fell on Tuesday, sliding away from recent highs as investors digested a hotter-than-expected January inflation report that showed prices cooling slower than forecasts anticipated.

The S&P 500 (^GSPC) sank about 1.3%, after the benchmark faltered Monday in its bid to keep its historic rally above 5,000 going. The Dow Jones Industrial Average (^DJI) fell nearly 1%, losing grip of a record closing high, while the tech-heavy Nasdaq Composite (^IXIC) dropped about 2%.

When removing the volatile food and energy categories, Tuesday’s Consumer Price Index (CPI) release showed “core” prices increased 0.4% in January, their largest monthly gain since April 2023. On a headline basis, prices increased 3.1%, above economist estimates but a deceleration from a 3.4% annual gain in December.

Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards

Also in focus is the next wave of corporate results in a better-than-expected earnings season. Eyes are on Coca-Cola (KO), Shopify (SHOP), and Airbnb (ABNB), among others, as investors watch for signs of a broadening beyond the “Magnificent Seven” earnings projections to drive market returns.

In other markets, the price of bitcoin (BTC-USD) hovered below $50,000 after the leading cryptocurrency hit the closely watched level for the first time since 2021, seen as a remarkable comeback.

Live2 updates

  • Stocks open in the red

    A hotter than expected January Consumer Price Index report sent stocks tumbling on Tuesday.

    S&P 500 (^GSPC) sank 1.3%, after the benchmark faltered Monday in its bid to keep its historic rally above 5,000 going. The Dow Jones Industrial Average (^DJI) fell about 0.9%, losing grip of a record closing high, while those on the tech-heavy Nasdaq Composite (^IXIC) dropped about 2% to pace declines.

    The Technology (XLK), Consumer Discretionary (XLY) and Real Estate (XLRE) sectors were all down about 2%.

    Source: Yahoo FinanceSource: Yahoo Finance

    Source: Yahoo Finance

  • Prices increase more than expected in January

    Consumer prices increased more than expected in January.

    The January Consumer Price Index (CPI) showed prices ticked up slightly at 0.3% over last month, an increase from the 0.2% seen in December. Prices rose 3.1% over the prior year, a decrease from the 3.4% increase seen the month prior.

    Economists had expected prices to increase 0.2% month over month and rise 2.9% year over year, according to Bloomberg data.

    When removing the volatile food and energy categories, “core” inflation remained unchanged from the month prior at an annual rate of 3.9%. Economists surveyed by Bloomberg had expected core inflation of 3.7%. On a monthly basis, core inflation was 0.4%, up unchanged from the 0.3% seen the month prior.

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