The Dow Jones Industrial Average shed 524.63 points, or 1.35%, to end at 38,272.75, the S&P 500 slipped 1.37% to end at 4,953.17, while the Nasdaq Composite dropped 1.8% to settle at 15,655.60
Stocks dropped on Tuesday after hotter-than-expected US inflation data for January spiked Treasury yields and raised doubts that the Fed would be able to cut rates several times this year, a key part of the bull case for the equity market.
The Dow Jones Industrial Average shed 524.63 points, or 1.35%, to end at 38,272.75 in its worst session since March 2023 on a percentage basis. At its lows, the 30-stock index dipped 757.52 points, or 1.95%. The S&P 500 slipped 1.37% to end at 4,953.17, while the Nasdaq Composite dropped 1.8% to settle at 15,655.60.
The Russell 2000 also suffered, dropping around 4% for its worst session since June 2022.
The consumer price index (CPI) advanced 0.3% in January from December. CPI was 3.1% higher on an annual basis. Economists polled by Dow Jones expected the consumer price index to have risen 0.2% month over month in January and 2.9% from a year earlier.
Core prices, which exclude volatile food and energy components, advanced 0.4% month over month and 3.9% from a year ago. Core CPI was expected to have risen 0.3% in January and 3.7% from a year earlier, respectively.
This may well come as an easy excuse to take some of the froth out of the top of this market that has been universally higher thus far this year, said Art Hogan, chief market strategist at B. Riley Financial. The CPI was, as reported today, just a touch hotter than expectations and proof positive that we are not on a linear path, but we are on a path headed lower.
The 2-year Treasury yield climbed above 4.66%, and the 10-year yield topped 4.32% after the CPI data. Tech shares including Microsoft and Amazon, which have led the market run to record highs as rates declined, led the losses in trading Tuesday. Microsoft and Amazon each shed more than 2%.
