Stock futures slip as traders brace for January consumer inflation report: Live updates – CNBC
Source: CNBC
The S&P 500 tumbled and interest rates spiked Wednesday after consumer prices rose more than expected in January, raising concern that inflation may reignite.
The broad market index slipped 0.27% to end at 6,051.97, and the Dow Jones Industrial Average tumbled 225.09 points, or 0.5%, to 44,368.56. The Nasdaq Composite eked out a 0.03% gain to close at 19,649.95.
“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),” said Sameer Samana, Wells Fargo Investment Institute head of global equities and real assets. “While risk markets can go higher, it will be a choppier trajectory than the last two years,” Samana added.
A sell-off occurred during the trading day after January’s consumer price index jumped 0.5% for the month, putting the annual inflation rate at 3%. Both were more than the respective 0.3% and 2.9% increases expected by economists polled by Dow Jones. Excluding volatile food and energy prices, core CPI rose 0.4% on the month and 3.3% for the past 12 months, both higher than expected.
The 10-year Treasury yield, a benchmark for mortgages, auto loans and credit cards, jumped to a session high of 4.66%. Shares of some megacap technology stocks, including Amazon and Alphabet, declined. Consumer shares and bank stocks at risk of slower spending and a weaker economy also retreated.
Helping sentiment were comments from House Speaker Mike Johnson, who said, according to Reuters, the White House was considering reciprocal tariff exemptions on products such as pharmaceuticals and automobiles. GM and Ford shares closed in positive territory, along with Eli Lilly.
Gains from Tesla, Apple and Palantir also helped curb losses. CVS Health shares popped nearly 15% on a major fourth-quarter earnings beat.
The latest inflation data makes it less likely the Fed will resume its rate-cutting campaign anytime soon and now raises concern perhaps the next move could even be a hike.
Federal Reserve Chair Jerome Powell testified before the House Committee on Financial Services on Wednesday and said the latest CPI data is a reminder that the Fed has made “great progress” toward bringing inflation closer to its 2% target but that it is “not quite there yet.”
“We want to keep policy restrictive for now,” he said before lawmakers in his second appearance on Capitol Hill this week. Powell’s comments follow his Tuesday testimony to the Senate Banking Committee, during which he said the Fed was in no hurry to make further interest rate cuts.
President Donald Trump said Wednesday morning before the CPI data was released that interest rates should be lowered.
Wharton School Professor Jeremy Siegel is uncertain whether the “Magnificent Seven” companies can continue to enjoy the run they’ve had, and expects the other sectors could start to outperform.
“We have these two markets. We have the Mag Seven, which is ex-Tesla is selling for 30, 35, and then we have the other 493 stocks that are selling more towards 19, which is, to me, very reasonable,” Siegel told CNBC’s “Squawk Box” on Wednesday, referring to the stocks’ valuation on a price-to-earnings basis. “I’ve often talked about 20 as an equilibrium P/E, so it really depends on what happens to that section.”
“Is that sector going to be the leader in the next bull market?” he asked.
Quantum computing stocks soared on Wednesday as traders bought the dip amid the sell-off sparked by the January inflation report and ongoing volatility in the market.
Rigetti Computing gained about 6%, while D-Wave Quantum gained 12% and BTQ Technologies added roughly 4%. IonQ shares also rose. Each of these stocks have been hammered since the start of the year.
The White House said President Trump could announce reciprocal tariffs on imports from other countries before his meeting with Indian Prime Minister Narendra Modi on Thursday.
“I do believe it will come before the prime minister’s visit tomorrow,” press secretary Karoline Leavitt told reporters at the White House when asked about Trump’s forthcoming announcement.
Shares of CVS rose more than 16% in afternoon trading, a climb that put the stock on track for its best day in more than 25 years.
If the stock closes around this level, it would see its largest percentage increase in a single day since Oct. 6, 1999, when it climbed 18.2%. Its next best day on record is Oct. 28, 2008, when it advanced 13.9%.
The move comes on the heels of the company’s fourth-quarter earnings and revenue beating Wall Street’s expectations.
While the stock has underperformed the broader market over the past year, falling more than 17% over the past 12 months, it has outperformed in this young year, seeing year-to-date gains of more than 42%.
Small-cap stocks saw outsized losses on Wednesday, adding to an already tough week for the group.
The Russell 2000 dropped nearly 0.8% in the session. By comparison, the broad S&P 500 ticked lower by just 0.2%.
With that slide, the Rus
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