Stocks drop, dollar and yields gain after hot US inflation data
By Caroline Valetkevitch
NEW YORK (Reuters) -World stock market indexes fell while the U.S. dollar hit three-month peaks and Treasury yields climbed on Tuesday after data showed U.S. inflation slowed less than expected in January.
The U.S. consumer price index report reinforced expectations that the Federal Reserve will hold interest rates steady in March.
Investors reined in bets on how much the Fed will cut rates this year.
The consumer price index increased 0.3% last month after gaining 0.2% in December, the Labor Department's Bureau of Labor Statistics said on Tuesday. Annual revisions to the CPI data published last Friday were mixed, but generally showed inflation was on a downward trend after surging in 2022.
Economists polled by Reuters had forecast the CPI gaining 0.2% on the month and rising 2.9% year-on-year.
The inflation rate has fallen from a peak of 9.1% in June 2022, causing the Fed to call time on rate hikes and start thinking about cuts.
«Markets are taking it pretty hard because it puts a nail in the coffin of early (March) Fed rate cuts,» said Carol Schleif, chief investment officer at BMO Family Office in Minneapolis, Minnesota. «It's evidence of a still-sturdy economy. There's still inflation to be wrung out of the system.»
The Dow Jones Industrial Average fell 666.18 points, or 1.72%, to 38,131.04, the S&P 500 lost 82.44 points, or 1.64%, to 4,939.40 and the Nasdaq Composite lost 304.13 points, or 1.91%, to 15,638.24.
U.S. stocks have been trading at record highs, boosted by the big technology companies and expectations the Fed will soon cut rates.
The MSCI world equity index, which tracks shares in 49 nations, lost 1.34%. The Europe-wide Stoxx 600 index was last down 1.2%, having traded 0.47%
Read more on investing.com
