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CNN
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Stocks tumbled on Tuesday after new data showed inflation eased slightly but remained strong in January.
The Dow Jones Industrial Average fell 531 points, or 1.4%, on Tuesday. The S&P 500 fell 1.4%, and the Nasdaq Composite fell 1.7%.
This came after the Dow Jones Industrial Average closed at an all-time high on Monday. The S&P 500 index closed above 5,000 for the first time on Friday as investors cheered on new data showing progress in inflation, but has since retreated below that level.
The Consumer Price Index showed prices rose 3.1% in the 12 months ending in January, according to Bureau of Labor Statistics data released Tuesday. On a monthly basis, the CPI increased by 0.3% last month.
Economists had expected inflation to fall to 0.2% starting in December, slowing to an annual rate of 2.9%, according to FactSet.
Traders now expect the Federal Reserve to first lower its benchmark lending rate in June or July, according to the CME FedWatch tool.
Greg Wilensky, head of U.S. fixed income at Janus Henderson Investors, said: “Given this new indicator, unless we see a rapid and severe decline in labor market activity or a geopolitical shock, June “The first rate cut seems like the most reasonable expectation.” In Tuesday’s memo.
Earlier this year, Wall Street was pricing in about six rate cuts in 2024 after the Fed signaled in December that it would begin lowering rates after raising rates to what was then a 22-year high. . This sparked a broad rally that saw everything from cryptocurrencies to stocks to gold rise.
Stocks continue to rise, hitting several all-time highs already this year. But some investors believe that continued strong economic data on Wall Street means The central bank has decided to cut interest rates three times, but it is unlikely to do so as quickly or aggressively as expected.
“If interest rates remain high for an extended period of time, especially if the assumption that the Fed is done raising rates is incorrect, the stock market will It cannot continue to rise.” Tuesday’s memo.
Atlanta Fed President Rafael Bostic told CNN in an exclusive interview published Monday that he doesn’t think the Fed will cut rates until the summer.
As stocks fell on Tuesday, bonds also sold off. The yield on 10-year government bonds rose to 4.27%.
Elsewhere, JetBlue shares soared 17.8% after Carl Icahn announced late Monday that he had acquired a 9.9% stake in the company.
Hasbro shares fell 4% after falling short of Wall Street’s expectations for the latest quarter.
This story is in development and will be updated.
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