The Dow Jones Industrial Average (^DJI), the NASDAQ (^IXIC), and the S&P 500 (^GSPC) closed more than one percent lower after the hotter-than-expected Consumer Price Index (CPI) reading for January. The reading could be seen by some on Wall Street as an indicator that the Federal Reserve may delay interest rate cuts.
Yahoo Finance’s Jared Blikre, Ines Ferré, and Madison Mills break down the market action.
Editor’s note: This article was written by Nicholas Jacobino
Video Transcript
JOSH LIPTON: For more on today’s market action, let’s get to our team coverage with Yahoo Finance’s Jared Blikre, Ines Ferre, and Madison Mills. Jared, let’s start with what is catching your eye today after January’s hotter than expected inflation report.
JARED BLIKRE: Josh, it’s all about the bond market. And I’m tracking the entire yield curve, which has shifted up. This middle line was where we were yesterday. This yellow line was where we were at the end of last year. And this purple line is where we are today.
And when we get very quick movements upwards or downwards for that matter in the bond market, it can have ripple effects across the rest of the market. And let me just show you in the 10-year T note yield where we have come from. As you said, up 14 basis points today. That is a lot for risk markets to deal with.
This is a one-year chart. And late last year when we had that, everything rally, we went down significantly about 100 basis points there. But the net result this year is we are heading higher and this is creating more volatility.
Just take a look at what the VIX did today. This is now at the highest level in months. And you scale this down to a five-day view, you can really see risk markets under the gun here. And we want to shift it over to Ines here who’s trucking sector action.
INES FERRE: Yeah, that’s right, Jared. And taking a look at the sectors today, we saw all 11 sectors of the S&P 500 in the red today. So let’s take a look here. We watched as rate-sensitive sectors have been the ones impacted the most.
You see XLY here down almost 2%, consumer discretionary. Remember that this includes names like Amazon, Tesla, Home Depot, McDonald’s. When economic times are good people flocked to these companies. When they’re bad, when they’re not so good, they stay away.
You also are taking a look at XLRE, this is the real estate sector down almost 2% as well. Higher for longer rates impacting commercial real estate, expected to also impact residential real estate or at least keep it frozen. You’re also seeing technology that’s in the red.
But take a look at the sectors that lost the least. Defensive, meaning health care, the health care sector. And also the energy sector down almost 1% as today we saw WTI and Brent crude up more than 1%. And now with a closer look at tech, let’s go to Madison Mills.
MADISON MILLS: Yeah, Ines, you can’t really talk about a big sell-off day like today without talking about where most of the market concentration still is in those Magnificent Seven stocks. Six of those seven doing exactly what you would expect in a sell-off day like today, down about between 1% and 3% depending on the name.
The one that’s the least big loser among those seven is Nvidia and why is that? This is our AI play, right? It’s continuing to get a lot of positive attention from investors.
One friend of the show on X calling it the only stock that could beat the Fed when the Fed was proven right today in that CPI print. And that’s exactly what we’re seeing after the close here– as we come up on the close rather. It looks like Nvidia is going to end the day about flat and that is something that we saw in the market action throughout the day. Every time that Nvidia kind of went right into the red, we saw it correcting back into the green.
I also spoke with Steve Sosnick about this name earlier today and he said that Nvidia is going to be critical to watch when it comes to earnings next week. We saw them beating across a lot of metrics in their last print, but that did not lead to positive market action for Nvidia. So that could continue to pour cold water across the markets. Josh and Julie, I want to go back to you in studio.
JULIE HYMAN: Maddie, thank you so much– or should I say Maddie, Ines, and Jared, thank you so much for that full team coverage of the sell off that we’re seeing today.