We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Pre-market futures are sinking like a stone on this morning’s Consumer Price Index (CPI) data, which came in stronger than predicted and much higher the investors were hoping for. The Dow, which had been down -10 points heading into the print, is now -435 points. The S&P 500 had been +3 points, and is now -60. The Nasdaq, up a decent +44 points prior to the CPI report’s release, is now down -228.
Bond rates — perhaps a better gauge of how inflation is affecting the market than equities, currently — also jumped on the news. The 10-year yield, which had been around +4.53% ahead of CPI, ratcheted up 10 basis points (bps). The 2-year yield did the same: it was +4.28% prior and +4.38% afterward.
CPI for January Hotter than Expected
There’s no other way to slice it: prices for consumers continue to rise, and beyond levels that are comfortable with the desired forward stock market outlook. Headline +0.5% CPI month over month outpaced expectations by 20 bps and the highest monthly read since August of 2023. For some further context, we actually saw a negative -0.1% CPI number back in June of last year; it’s mostly gone up since.
Year over year headline CPI is also known as the Inflation Rate. The January print came in at +3.0%, 20 bps hotter than expectations. June ’24 was the last time we were this high; perhaps even more tellingly, this is the fourth-straight monthly increase on the Inflation Rate, going back to September’s +2.4%.
Stripping out volatile food and energy prices brings us to the “core” reads on CPI, and these were uncomfortably warm as well. Core CPI month over month came in at +0.45%, 10 bps higher than estimates and well above the +0.21% reported for December. Year over year, core CPI was back up to +3.3% — 20 bps higher than anticipated and now at the highs we’ve seen in five of the past eight months. While this is far from the end of the world, it’s certainly not demonstrating tame inflation to the Fed’s standards.
Fed Chair Powell Appears Before the House Today
Speaking of the Fed, Fed Chair Jerome Powell spends the second of two days on Capitol Hill in front of the House Financial Services Committee, where he’ll likely reiterate the Fed’s defense of holding steady at current interest rate levels. As a matter of fact, he’ll likely be able to speak less defensively; today’s CPI is proof positive that the Fed’s caution on cutting rates further is warranted.
Of course, that’s the crux of the selloff this morning: that the Fed is going to look at numbers like today’s CPI and balk at cutting rates for the foreseeable future. Add to this the proposed tariffs from the Trump administration that have yet to manifest in CPI results which promise to raise prices further, and now there is real doubt any new rate cuts will come at any time in 2025.
Kraft Heinz Stock Lower on Mixed Q4
Household staple Kraft Heinz (KHC - Free Report) reported an earnings beat in its Q4 report this morning, putting up 84 cents per share versus 78 cents expected, for a +7.7% positive surprise. Yet revenues in the quarter came in at $6.58 billion, -1.24% lower than the Zacks consensus. Reporting as the company is on this deep-gouge re-think of the economic outlook, shares are down -6.4% ahead of the opening bell.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
CPI Comes in Much Hotter Than Expected
Pre-market futures are sinking like a stone on this morning’s Consumer Price Index (CPI) data, which came in stronger than predicted and much higher the investors were hoping for. The Dow, which had been down -10 points heading into the print, is now -435 points. The S&P 500 had been +3 points, and is now -60. The Nasdaq, up a decent +44 points prior to the CPI report’s release, is now down -228.
Bond rates — perhaps a better gauge of how inflation is affecting the market than equities, currently — also jumped on the news. The 10-year yield, which had been around +4.53% ahead of CPI, ratcheted up 10 basis points (bps). The 2-year yield did the same: it was +4.28% prior and +4.38% afterward.
CPI for January Hotter than Expected
There’s no other way to slice it: prices for consumers continue to rise, and beyond levels that are comfortable with the desired forward stock market outlook. Headline +0.5% CPI month over month outpaced expectations by 20 bps and the highest monthly read since August of 2023. For some further context, we actually saw a negative -0.1% CPI number back in June of last year; it’s mostly gone up since.
Year over year headline CPI is also known as the Inflation Rate. The January print came in at +3.0%, 20 bps hotter than expectations. June ’24 was the last time we were this high; perhaps even more tellingly, this is the fourth-straight monthly increase on the Inflation Rate, going back to September’s +2.4%.
Stripping out volatile food and energy prices brings us to the “core” reads on CPI, and these were uncomfortably warm as well. Core CPI month over month came in at +0.45%, 10 bps higher than estimates and well above the +0.21% reported for December. Year over year, core CPI was back up to +3.3% — 20 bps higher than anticipated and now at the highs we’ve seen in five of the past eight months. While this is far from the end of the world, it’s certainly not demonstrating tame inflation to the Fed’s standards.
Fed Chair Powell Appears Before the House Today
Speaking of the Fed, Fed Chair Jerome Powell spends the second of two days on Capitol Hill in front of the House Financial Services Committee, where he’ll likely reiterate the Fed’s defense of holding steady at current interest rate levels. As a matter of fact, he’ll likely be able to speak less defensively; today’s CPI is proof positive that the Fed’s caution on cutting rates further is warranted.
Of course, that’s the crux of the selloff this morning: that the Fed is going to look at numbers like today’s CPI and balk at cutting rates for the foreseeable future. Add to this the proposed tariffs from the Trump administration that have yet to manifest in CPI results which promise to raise prices further, and now there is real doubt any new rate cuts will come at any time in 2025.
Kraft Heinz Stock Lower on Mixed Q4
Household staple Kraft Heinz (KHC - Free Report) reported an earnings beat in its Q4 report this morning, putting up 84 cents per share versus 78 cents expected, for a +7.7% positive surprise. Yet revenues in the quarter came in at $6.58 billion, -1.24% lower than the Zacks consensus. Reporting as the company is on this deep-gouge re-think of the economic outlook, shares are down -6.4% ahead of the opening bell.