Stocks Drop On Sticky US Inflation
Muhammad Irfan Published February 13, 2024 | 08:22 PM
Stocks in the United States and Europe slumped on Tuesday while the dollar climbed as data showed that US inflation slowed less than expected in January, diminishing chances of an early interest rate cut
London, (UrduPoint / Pakistan Point News - 13th Feb, 2024) Stocks in the United States and Europe slumped on Tuesday while the Dollar climbed as data showed that US inflation slowed less than expected in January, diminishing chances of an early interest rate cut.
The closely watched Consumer Price Index (CPI) rose 3.1 percent from a year ago in January, down from 3.4 percent in December, the Department of Labor said, while analysts had tipped it could fall below 3.0 percent.
Meanwhile, the "core" CPI reading that excludes volatile food and energy prices and is more important to policymakers, was steady at a 3.9 percent annual increase.
The US Federal Reserve has indicated it will likely begin to cut interest rates -- which it began to hike in 2022 to tame surging inflation -- later this year as the pace of price rises return closer to its 2.0 percent target.
That has heightened the attention of investors to US inflation data.
"The January inflation report came in hot across the board and that has the potential to spook investors after a big rally over the last few months," said eToro analyst Bret Kenwell.
Stocks have been propelled to new heights in recent months as investors anticipate a drop in interest rates which will boost the fortunes of companies, as well as the blockbuster performance of the US tech industry thanks to the boom in artificial intelligence.
Wall Street stocks fell sharply at the start of trading on Tuesday.
The Dow fell 0.8 percent from a record high. The S&P 500 and the Nasdaq Composite, which both set intraday highs on Monday, fell by 1.3 and 2.1 percent respectively.
In Europe, losses deepened after the US data was released.
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