The recent release of inflation data has sent shockwaves through the financial markets, causing the Dow Jones Industrial Average to plummet by a staggering 524 points. This sudden downturn has left investors and analysts alike in a state of uncertainty and concern.
The inflation figures, which revealed a significant rise in consumer prices, have raised fears of an overheating economy and potential interest rate hikes. Investors are now grappling with the possibility of reduced corporate profits and increased borrowing costs, leading to a widespread sell-off across various sectors.
Regional market watchers were paying close attention to the outcome of the presidential election in Indonesia, one of Southeast Asia’s biggest economies and a supplier of strategically important resources like nickel.
Hong Kong’s Hang Seng index resumed trading after the Lunar New Year holiday, edging 0.2% higher to 15,769.95 after opening lower. Markets in mainland China remain closed all week.
Core prices, which exclude volatile food and energy components, rose 0.4% month over month and 3.9% from a year ago. Core CPI was expected to have increased 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’s 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’re not on a linear path, but we’re on a path headed lower.”
Stocks slid Tuesday after consumer inflation data came in hotter than expected. The Dow Jones Industrial Average had its worst day since March 2023, but the index is still up for the year.
The 10-year yield rose to 4.315%.
The consumer price index climbed 3.1% year over year in January, according to data released Tuesday by the Bureau of Labor Statistics. That is down from the 3.4% pace set in December, which was a slight reacceleration from the previous month.
As for the main indexes, the Dow Jones Industrial Average slumped 1.4% to 38,272 and the S&P 500 fell 1.4% to 4,953. The rate-sensitive Nasdaq Composite performed the worst of the three, spiraling 1.8% to 15,655 as the yields on the 2-year and 10-year Treasury bonds jumped to levels not seen since mid-December.
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