Stock Market Today: Dow Jones tumbles 400 points as US inflation surges to 3%, S&P 500 and Nasdaq also slide amid Fed rate cut concerns
US inflation rises to 3% yoy, weakening rate cut expectations
The latest Consumer Price Index (CPI) data released by the US Bureau of Labor Statistics (BLS) showed that inflation rose 50 basis points (bps) to 3% in January 2025, compared to 2.9% in December 2024. The higher-than-expected inflation figures dimmed hopes of a Federal Reserve interest rate cut in the near future.
“The all-items index rose 3.0% for the 12 months ending January, after rising 2.9% over the 12 months ending December,” the BLS report stated. This increase aligns with Federal Reserve Chairman Jerome Powell’s recent comments that the central bank is in no rush to lower interest rates.
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Dow Jones falls 400 points as market reacts to inflation data
Following the inflation report, the Dow Jones Industrial Average opened at 44,153.60 points, dropping over 400 points from its previous close of 44,593.65 points. The market decline reflected investors’ concerns that persistent inflation could lead to prolonged high interest rates, impacting corporate earnings and economic growth.
Several major stocks within the Dow Jones index saw losses in early trading. Home Depot Inc., Sherwin-Williams Co., Caterpillar Inc., Salesforce Inc., Amazon.com Inc., American Express Co., Cisco Systems Inc., 3M Co., Nike Inc., and Microsoft Corp. were among the top decliners.However, some stocks showed resilience amid the market turmoil. UnitedHealth Group Inc., Walmart Inc., JPMorgan Chase & Co., and Apple Inc. traded in positive territory during the morning session.
S&P 500 and Nasdaq Composite also decline
The S&P 500 index dropped 0.92%, opening at 6,012.78 points, down from its previous close of 6,068.50 points. Key stocks contributing to the decline included Wabtec, Waters Corp., Biogen Inc., Iron Mountain Inc., Smurfit Westrock Plc., Arista Networks Inc., Martin Marietta Materials Inc., Cincinnati Financial Corp., Builders FirstSource Inc., and Eversource Energy.
Despite the broader market downturn, some S&P 500 stocks posted gains. CVS Health Corp., Gilead Sciences Inc., Edwards Lifesciences Corp., Generac Holdings Inc., Humana Inc., Super Micro Computer Inc., Molina Healthcare Inc., Tesla Inc., Tapestry Inc., and NCP Semiconductors N.V. saw an uptick in early trading.
Meanwhile, the Nasdaq Composite index dropped 0.89%, opening at 19,468.23 points, compared to 19,643.86 points in the previous session. While the index witnessed widespread declines, Tivic Health Systems Inc., Xilio Therapeutics Inc., Kindly MD Inc., Nxu Inc., Firefly Neuroscience Inc., Yoshiharu Global Co., Sacks Parente Golf Inc., Mynaric AG ADR., INLIF Ltd., and Lightbridge Corp. emerged as early gainers.
However, Alternus Clean Energy Inc., Atomera Inc., KALA Bio Inc., T2 Biosystems Inc., Ming Shing Group Holdings Ltd., Staar Surgical Co., Fitell Corp., OneStream Inc., Society Pass Inc., and Lottery.com were among the biggest losers in early trading.
Market outlook: Inflation to shape Fed’s next move
With inflation exceeding expectations, market analysts believe the Federal Reserve will adopt a cautious stance before considering rate cuts. The latest CPI report reinforces Powell’s assertion that rate reductions are not imminent.
As investors digest the inflation data and its implications for monetary policy, market volatility is expected to persist. Traders will closely watch upcoming economic indicators and Federal Reserve statements to gauge the central bank’s next move.
FAQs:
Why did the Dow Jones drop today?
The Dow Jones fell 400 points due to a rise in US inflation to 3%, reducing hopes for Fed rate cuts.
Will the Fed cut interest rates soon?
With inflation rising, the Federal Reserve is unlikely to cut rates in the near term.
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