Wall Street closed largely lower on Wednesday as investors reacted to a stronger-than-expected January inflation report, tempering expectations for Federal Reserve interest rate cuts in 2025.
Market Performance
Dow Jones Industrial Average (^DJI): Fell 0.5%.
S&P 500 (^GSPC): Dropped nearly 0.3%.
Nasdaq Composite (^IXIC): Finished slightly above the flatline.
Inflation Data and Fed Outlook
The latest Consumer Price Index (CPI) report showed inflation rising more than anticipated in January. Core inflation, which excludes volatile food and energy prices, increased 0.4% from the previous month and 3.3% year-over-year—both higher than December’s figures.
The hotter inflation data led traders to scale back expectations for Federal Reserve rate cuts in 2025. As of Wednesday, markets were pricing in just one rate cut for the year, down from two earlier forecasts. The 10-year Treasury yield (^TNX) surged 10 basis points to 4.64%, its highest level in over two weeks.
Earnings Highlights
Corporate earnings painted a mixed picture of economic resilience.
Kraft Heinz (KHC): Shares fell after the company’s 2025 profit outlook disappointed investors.
CVS Health (CVS): Stock gained as the healthcare giant reported a smaller-than-expected drop in quarterly profit.
As inflation concerns mount and rate-cut bets waver, market volatility is expected to persist in the coming weeks.
