US stocks stumbled on Tuesday, pulling back from recent highs as investors grappled with a January inflation report that exceeded expectations, indicating a slower cooling of prices than anticipated.
The S&P 500 (^GSPC) dipped approximately 1.3%, following a wobble in its upward momentum on Monday, failing to sustain its historic rally above the 5,000 mark. Similarly, the Dow Jones Industrial Average (^DJI) experienced a setback, shedding nearly 1% and relinquishing its grip on a record closing high. Meanwhile, the Nasdaq Composite (^IXIC), dominated by tech stocks, recorded a drop of about 2%.
The release of Tuesday’s Consumer Price Index (CPI) report revealed that “core” prices, excluding the volatile food and energy sectors, surged by 0.4% in January, marking the largest monthly gain since April 2023. On a headline basis, prices climbed 3.1%, surpassing economist estimates but showing a slowdown from December’s 3.4% annual gain.
Attention also turned to the ongoing earnings season, which has thus far outperformed expectations. Investors are closely monitoring corporate results from industry giants such as Coca-Cola (KO), Shopify (SHOP), and Airbnb (ABNB), seeking indications of a broader improvement beyond the initially projected “Magnificent Seven” earnings forecasts, which are expected to drive market returns. Airbnb Inc shares are currently trading at $150.46, representing a decrease of $3.34, or 2.17%, for the day.The Coca-Cola Company’s stock is valued at $59.93, showing a positive movement of $0.21, or 0.35%, for the day. Shopify Inc’s shares are priced at $82.77, reflecting a decline of $6.35, or 7.13%, during today’s trading session.
Elsewhere, the price of bitcoin (BTC-USD) lingered below the $50,000 mark after the leading cryptocurrency reached this significant threshold for the first time since 2021, marking a notable resurgence in its value.
The movement of stocks in response to the January inflation report highlights the market’s sensitivity to economic indicators and underscores the ongoing impact of inflation concerns on investor sentiment. Investors are closely scrutinizing corporate earnings and other economic indicators for clues about the trajectory of inflation and the future direction of stock prices.
