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U.S. stocks closed sharply lower on Tuesday after hotter-than-expected inflation data pushed back market expectations on the timing of the Federal Reserve’s first rate cut this year, sending Treasury yields higher. All three major indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) declined 1.4% or 524.63 points to close at 38,272.75 points, recording its biggest single-day percentage drop since March 22, 2023.
The S&P 500 slid 1.4% or 68.67 points, to end at 4,953.17 points. Consumer discretionary, real estate and tech stocks were the worst performers.
The Technology Select Sector SPDR (XLK) fell 1.7%, while the Consumer Discretionary Select Sector SPDR (XLY) slipped 2%. The Real Estate Select Sector SPDR (XLRE) declined 1.8%. All 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq drooped 1.8% or 286.95 points to finish at 15,655.60 points.
The fear-gauge CBOE Volatility Index (VIX) was up 13.78% to 15.85. Decliners outnumbered advancers on the NYSE by a 10-to-1 ratio. On Nasdaq, a 4.9-to-1 ratio favored declining issues. A total of 12.9 billion shares were traded on Tuesday, higher than the last 20-session average of 11.71 billion.
Fresh Inflation Data Dampen Investors’ Spirits
The Dow and S&P 500 had hit record highs this year, with the latter surpassing the 5,000 mark last week. However, the upbeat investors’ sentiment took a hit on Tuesday after a Labor Department report showed that inflation rose once again in January.
The consumer price index (CPI) increased 0.3% month over month in January, higher than the consensus estimate of 0.2%. Year over year, CPI rose 3.1% in January after increasing 3.4% in December. However, January’s reading came in higher than the consensus estimate of 2.9%.
Core CPI, which excludes the volatile energy and food costs, jumped 0.4% month over month in January and 3.9% on a year-over-year basis.
Investors were optimistic that easing inflation would soon see the Federal Reserve going for rate cuts. Although the Federal Reserve last month cleared that it’s unlikely that the central bank would be in a position to cut rates as inflation was still higher than its 2% target.
Tuesday’s data further dampened investors’ spirits as inflation unexpectedly rose in January, casting doubts on the timing of the Fed’s first rate cut.
Following the release of the inflation report, Treasury yields jumped. The 10-year Treasury yield raced to 4.22%, while the 2-year Treasury yield rose to 4.66% on Tuesday.
Investors also closely monitored earnings from a batch of companies. The Coca-Cola Company ((KO - Free Report) ) shares declined 0.6% despite an earnings beat. The Coca-Cola Company reported fourth-quarter 2023 earnings of $0.49 per share, beating the Zacks Consensus Estimate of $0.48 per share.
Shares of Shopify Inc. ((SHOP - Free Report) ) also plummeted 13.4% after the company reported fourth-quarter 2023 earnings of $0.34 per share, surpassing the Zacks Consensus Estimate of $0.31 per share.
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Stock Market News for Feb 14, 2024
U.S. stocks closed sharply lower on Tuesday after hotter-than-expected inflation data pushed back market expectations on the timing of the Federal Reserve’s first rate cut this year, sending Treasury yields higher. All three major indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) declined 1.4% or 524.63 points to close at 38,272.75 points, recording its biggest single-day percentage drop since March 22, 2023.
The S&P 500 slid 1.4% or 68.67 points, to end at 4,953.17 points. Consumer discretionary, real estate and tech stocks were the worst performers.
The Technology Select Sector SPDR (XLK) fell 1.7%, while the Consumer Discretionary Select Sector SPDR (XLY) slipped 2%. The Real Estate Select Sector SPDR (XLRE) declined 1.8%. All 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq drooped 1.8% or 286.95 points to finish at 15,655.60 points.
The fear-gauge CBOE Volatility Index (VIX) was up 13.78% to 15.85. Decliners outnumbered advancers on the NYSE by a 10-to-1 ratio. On Nasdaq, a 4.9-to-1 ratio favored declining issues. A total of 12.9 billion shares were traded on Tuesday, higher than the last 20-session average of 11.71 billion.
Fresh Inflation Data Dampen Investors’ Spirits
The Dow and S&P 500 had hit record highs this year, with the latter surpassing the 5,000 mark last week. However, the upbeat investors’ sentiment took a hit on Tuesday after a Labor Department report showed that inflation rose once again in January.
The consumer price index (CPI) increased 0.3% month over month in January, higher than the consensus estimate of 0.2%. Year over year, CPI rose 3.1% in January after increasing 3.4% in December. However, January’s reading came in higher than the consensus estimate of 2.9%.
Core CPI, which excludes the volatile energy and food costs, jumped 0.4% month over month in January and 3.9% on a year-over-year basis.
Investors were optimistic that easing inflation would soon see the Federal Reserve going for rate cuts. Although the Federal Reserve last month cleared that it’s unlikely that the central bank would be in a position to cut rates as inflation was still higher than its 2% target.
Tuesday’s data further dampened investors’ spirits as inflation unexpectedly rose in January, casting doubts on the timing of the Fed’s first rate cut.
Following the release of the inflation report, Treasury yields jumped. The 10-year Treasury yield raced to 4.22%, while the 2-year Treasury yield rose to 4.66% on Tuesday.
Tech stocks suffered the most, with shares of major tech companies taking a hit. Shares of Apple Inc. ((AAPL - Free Report) ) fell 1.3%, while Microsoft Corporation ((MSFT - Free Report) ) and Amazon.com, Inc. ((AMZN - Free Report) ) each declined 2.2%. Amazon has a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Investors Watch Earnings Reports
Investors also closely monitored earnings from a batch of companies. The Coca-Cola Company ((KO - Free Report) ) shares declined 0.6% despite an earnings beat. The Coca-Cola Company reported fourth-quarter 2023 earnings of $0.49 per share, beating the Zacks Consensus Estimate of $0.48 per share.
Shares of Shopify Inc. ((SHOP - Free Report) ) also plummeted 13.4% after the company reported fourth-quarter 2023 earnings of $0.34 per share, surpassing the Zacks Consensus Estimate of $0.31 per share.