Markets Look to Inflation Data, Fall Sharply

Stocks dropped on Tuesday after hotter-than-expected inflation data for January spiked Treasury yields and raised doubts that the Federal Reserve would be able to cut rates several times this year, a key part of the bull case for the equity market.

The Dow Jones Industrials swooned 532.48 points, or 1.4%, to open Tuesday at 38,264.90. It’s the biggest drop since March 2023, when it fell 1.6%

The S&P 500 index slid 73.66 points, or 1.5%, to 4,948.18.

The NASDAQ index dumped 303.18 points, or 1.9%, to 15,639.37.

In corporate news, JetBlue Airways spiked 12% after activist investor Carl Icahn reported a nearly 10% stake in the airline. Toymaker Hasbro lost 2% after missing analyst expectations for the fourth quarter. Shares of Avis Budget Group slipped 10% on the back of disappointing fourth-quarter revenue.

The consumer price index rose 0.3% in January from December. CPI was up 3.1% on an annual basis. Economists polled by Dow Jones expected CPI to have increased by 0.2% month over month in January and 2.9% from a year earlier.

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.

Prices for the 10-year Treasury withered, raising yields to 4.28% from Monday’s 4.19%. Treasury prices and yields move in opposite directions.

Oil prices jumped 38 cents to $77.30 U.S. a barrel.

Gold prices lost $28.60 to $2,004.40.