Dow falls more than 400 points after January inflation surprise

dow falls more than 400 points after january inflation surprise

Dow falls more than 400 points after January inflation surprise

Stocks took a hit Tuesday after the Labor Department’s latest inflation reading came in higher than expected, fueling concerns on Wall Street that the Federal Reserve might not cut interest rates as early or as many times this year as it previously anticipated.

Prices rose 0.3 percent from December to January and were up 3.1 percent from the same period a year ago, according to the consumer price index (CPI) released Tuesday.

Economists polled by The Wall Street Journal had predicted a 0.2 percent monthly increase and a 2.9 percent annual increase.

The Dow Jones Industrial Average dropped nearly 450 points, or nearly 1.2 percent, as of noon Tuesday, after the new data was released. The S&P 500 fell nearly 1.2 percent, and the Nasdaq dropped 1.4 percent.

“The consumer price index came in slightly hotter than expected this morning, but showed continued gradual progress in the fight against inflation,” said Julia Pollak, chief economist at ZipRecruiter.

“The major culprit was housing costs, which rose 0.6% in January and contributed over two-thirds of overall inflation during the month. Even though high interest rates have dramatically cooled activity in the housing market, prices have not fallen because housing inventory is so scarce.”

The economy is doing much better overall than it was two years ago, just before the Fed launched its interest rate hike crusade in an attempt to curb rampant inflation. While inflation has fallen from its 9 percent peak in summer 2022, it has not yet dropped to the central bank’s 2 percent target.

The Fed signaled in December that it would cut interest rates this year, although it has not specified when. But as the 2024 election heats up, the politically independent central bank is increasingly becoming the target of partisan attacks.

Some Democrats have urged Fed Chair Jerome Powell to cut interest rates, which they say have exacerbated a housing affordability crisis in the U.S.

Former President Trump, the front-runner for the Republican presidential nomination, accused Powell — a lifelong Republican and Trump appointee — of being “political.” He also suggested Powell would consider cutting interest rates to help Democrats during the upcoming election.

Trump currently has an edge over President Biden in polling on economic issues, which are poised to play a major role in the first election after the pandemic recovery. A recent Financial Times poll showed Trump 11 points ahead of Biden on who voters believe would best handle the economy.

For the latest news, weather, sports, and streaming video, head to The Hill.

News Related

OTHER NEWS

Lawsuit seeks $16 million against Maryland county over death of pet dog shot by police

A department investigator accused two of the officers of “conduct unbecoming an officer” for entering the apartment without a warrant, but the third officer was cleared of wrongdoing, the suit says. Read more »

Heidi Klum shares rare photo of all 4 of her and Seal's kids

Heidi Klum posted a rare picture with husband Tom Kaulitz and her four kids: Leni, 19, Henry, 18, Johan, 17, and Lou, 14, having some quality family time. Read more »

European stocks head for flat open as markets struggle to find momentum

This is CNBC’s live blog covering European markets. European markets are heading for a flat open Tuesday, continuing lackluster sentiment seen at the start of the week in the region ... Read more »

Linda C. Black Horoscopes: November 28

Nancy Black Today’s Birthday (11/28/23). This year energizes your work and health. Faithful domestic routines provide central support. Shift directions to balance your work and health, before adapting around team ... Read more »

Michigan Democrats poised to test ambitious environmental goals in the industrial Midwest

FILE – One of more than 4,000 solar panels constructed by DTE Energy lines a 9.37-acre swath of land in Ann Arbor Township, Mich., Sept. 15, 2015. Michigan will join ... Read more »

Gaza Is Falling Into ‘Absolute Chaos,’ Aid Groups Say

A shaky cease-fire between Israel and Hamas has allowed a surge of aid to reach Palestinians in Gaza, but humanitarian groups and civilians in the enclave say the convoys aren’t ... Read more »

Bereaved Israeli and Palestinian families to march together in anti-hate vigil

Demonstrators march against the rise of antisemitism in the UK on Sunday – SUSANNAH IRELAND/REUTERS Bereaved Israeli and Palestinian families will march together as part of an anti-hate vigil on ... Read more »
Top List in the World