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NEW YORK (AP) — Stocks on Wall Street are falling after key statistics on U.S. consumer-level inflation were higher than expected.
S&P 500 futures fell 1.1% about 10 minutes after the Labor Department report. Dow futures fell 0.8% and Nasdaq futures fell 1.6%. Bond yields soared.
Consumer prices rose 3.1% in January from a year earlier, according to a Labor Department report released Tuesday morning. Economists had expected a 2.9% increase.
The stronger-than-expected inflation numbers follow recent reports showing that the U.S. economy and job market remain remarkably strong. These reports and comments from Fed officials have forced traders to raise their expectations for when the Fed will start cutting interest rates.
Inflation, which peaked above 9% in June 2022, has cooled enough that the Fed has signaled the possibility of lowering its key interest rate several times this year. These rate cuts typically energize financial markets and the economy, releasing pressure that has built up since the Fed raised its key interest rate to its highest level since 2001.
In the bond market, yields rose significantly. The yield on the 10-year U.S. Treasury rose to 4.26% from 4.16% as of late Monday.
The yield on the two-year Treasury note, which more accurately reflects expectations from the Federal Reserve, rose to 4.60% from 4.48% on Monday.
European indicators fell further following the US inflation report. France’s CAC40 index fell 0.4%, Germany’s DAX index fell 0.5% and Britain’s FTSE 100 index fell 0.2%.
Asian stocks ended mostly higher on Tuesday.
In Asia, Japan’s benchmark Nikkei 225 rose 2.9% to end at 37,963.97, briefly topping 38,000 yen for the first time in 34 years. Australia’s S&P/ASX 200 index lost some of its gains and fell 0.2% to 7,603.60. South Korea’s Kospi rose 1.1% to 2,649.64.
Markets in China, Hong Kong and Taiwan were closed for the Lunar New Year.
In energy trading, benchmark U.S. crude oil rose 67 cents to $77.59 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard crude, rose 59 cents to $82.63 per barrel.
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