US stocks tumble as hot inflation data confirms rate-cut delay

• January’s CPI rose 0.3% month-to-month and 3.1% on an annual basis.

• It eclipsed Wall Street’s expectations and means the Federal Reserve likely won’t cut interest rates soon.

• Stocks fell while bond yields jumped on the news.

US stocks fell as investors digested January’s hotter-than-predicted inflation data report.

The consumer price index rose 0.3% from last month and 3.1% from a year earlier, surpassing expectations of a 0.2% and 2.9% increase, respectively.

Core CPI, a gauge preferred by Federal Reserve economists, saw its biggest increase in eight months, jumping 0.4% month-over-month and 3.9% from a year ago. The measure excludes food and energy components, and was expected to rise 0.3% month-over-month and 3.7% year-over-year.

Fed officials have long cautioned markets that further evidence of falling inflation is necessary before the central bank starts cutting interest rates. US indexes withdrew in response to Tuesday’s report, with the Dow Jones pulling back from the previous session’s record close.

“The ‘last mile’ – as expected – is proving to be stickier and more stubborn, inhibiting even the most dovish wing of the FOMC,” Quincy Krosby, chief global strategist for LPL Financial, said of this morning’s reading.

Treasury yields also spiked, with the policy-sensitive two-year bonds surging 12 basis points. The 10-year rate rose over 11 basis points to 4.281%.

“Tuesday’s stronger-than-expected CPI print may cause the Fed to delay its rate cuts past May and June, which is when the market expects the Fed to begin cutting. Getting to the Fed’s magical 2% inflation target may prove more difficult than expected and result in elevated interest rates for a longer period of time,” said Skyler Weinand, chief investment officer of Regan Capital.

Here’s where US indexes stood at the 9:30 a.m. opening bell on Tuesday: 

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Here’s what else happened today: 

In commodities, bonds, and crypto: 

• West Texas Intermediate crude oil climbed 0.75% to $77.50 a barrel. Brent crude, the international benchmark, rose 0.6% to $82.49 a barrel.

• Gold sank 0.86% to $2,015.90 per ounce.

• The 10-year Treasury yield rose 10 basis points to 4.277%.

• Bitcoin dropped 2.67% to $48,857.

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