Updated 1 min read
In This Article:
US stocks were largely lower on Wednesday as investors digested a hotter-than-expected January inflation reading and investors pared back bets on Federal Reserve interest rate cuts in 2025.
The Dow Jones Industrial Average (^DJI) dropped 0.5%, while the benchmark S&P 500 (^GSPC) slipped nearly 0.3%. The tech-heavy Nasdaq Composite (^IXIC) finished just above the flatline.
The Consumer Price Index (CPI) out Wednesday showed headline consumer inflation rose more than forecast in January. “Core” prices — which strip out the more volatile costs of food and gas — reversed the previous month’s easing, up 0.4% over last month and 3.3% over last year, with both rates higher than in December.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
The surprise inflation print pushed back investor bets on interest-rate cuts in 2025. As of Wednesday, traders were pricing just one interest-rate cut, after pricing in two for most of the year. The 10-year Treasury yield (^TNX) added 10 basis points to hit just shy of 4.64%, its highest level in more than two weeks, following the inflation data.
A fresh batch of earnings provided some clues to Corporate America’s resilience. Kraft Heinz (KHC) shares slid after the packaged food maker’s 2025 profit outlook fell short. But CVS Health (CVS) stock got a boost as investors welcomed a smaller drop in quarterly profit than expected.
On the after-hours docket, Reddit (RDDT) results come amid sky-high Wall Street expectations. Robinhood’s (HOOD) report is also in focus after the stock touched a three-year high.
LIVE 20 updates
-
Reddit stock tumbles on earnings miss as daily active users fall short of estimates
Yahoo Finance’s Laura Bratton reports:
Reddit (RDDT) stock fell as much as 12% in after-hours trading Wednesday following the company’s mixed fourth quarter earnings results.
While the social media platform’s fourth quarter revenue of $427.7 million surpassed Wall Street’s forecast of $405.5 million, its diluted earnings per share of $0.36 fell below analysts’ estimate of $0.48, according to Bloomberg consensus estimates. Reddit’s daily active users in the December quarter hit 101.7 million, less than the 103.8 million expected.
-
Robinhood stock pops after earnings, sales beat
Robninhood (HOOD) shares rose about 6% in after-hours trading as the company reported quarterly results that topped Wall Street’s expectations.
The brokerage reported adjusted earnings per share of $1.01 in the fourth quarter, far above analyst estimates of $0.43. Meanwhile the company reported revenue of $1.01 billion int he fourth quarter, above estimates for $940.8 million.
-
The market has entered a ‘bifurcated’ rate environment again
A hot inflation print on Wednesday pushed the 10-year Treasury yield up about to 10 basis points to 4.63%, its highest level in more than two weeks.
And this led to the typical market action seen over the past year as rates rise. The market’s most interest rate sensitive areas like Real Estate (XLRE) and the small cap Russell 2000 (^RUT) fell about 0.7%, lagging the 0.4% drop seen in the S&P 500 (^GSPC).
At 4.63%, the 10-year Treasury Yield is now at a level where Piper Sandler chief investment strategist Michael Kantrowitz said in Yahoo Finance’s Chartbook could deliver “bifurcated” returns in which stocks that are sensitive to interest rate refinancing are hurt while those that see little earnings impact still perform well.
“Where you really see the impact of higher rates today is in leadership and the breadth of the market, which is pretty terrible,” Kantrowitz told Yahoo Finance’s Market Domination. “All your rate sensitive areas are doing poorly. So when rates move up it tends to hit those more rate sensitive parts the most. And if they move up high enough like they initially did off the CPI report, it hits the whole market.”
Below, Kantrowitz breaks down the key levels to watch on the 10-year Treasury yield. Read more from the Yahoo Finance Chartbook here.
-
Intel extends gains, rising more than 6% as other AI stocks rally
Intel (INTC) stock rose more than 6% on Wednesday, extending gains from the prior day, when Vice President JD Vance made bullish comments about domestic chip manufacturing.
You can read more about Intel’s stock rally here.
But it wasn’t just Intel stock rallying on Wednesday. As seen below, several smaller AI-related stocks were in rally mode on afternoon trade including defense software company BigBear. aI (BBAI).
-
Fed interest rate hikes remain ‘unlikely’
While Wednesday’s hot inflation print shook up how markets are viewing the Fed’s path this year, the data doesn’t have Wall Street calling for interest rate hikes just yet.
Here’s what two economists who don’t see the Fed cutting again this year are saying about the case for interest rate hikes.
“Hikes remain unlikely, but they seem less inconceivable now,” Bank of America US economist Aditya Bhave wrote in a note to clients on Wednesday. “We still think the threshold for hikes is 3% core PCE inflation and unanchored long-term inflation expectations.”
The “core” Personal Consumption Expenditures (PCE) index will be released during the last week of February. Core PCE showed prices increased 2.8% in December.
“While we continue to think the next move is a cut rather than a hike, recent events have raised the possibility that the Fed needs to hike rates in the second half of this year,” Deutsche Bank chief US economist Matthew Luzzetti wrote in a research note on Wednesday.
-
Housing inflation pressures intensified in January from previous month
The latest Consumer Price Index (CPI) showed that housing inflation picked up in January on a monthly basis, reversing the easing trend seen in the previous month.
Data from the Bureau of Labor Statistics showed shelter costs rose 0.4% in January compared to the previous month and higher than December’s 0.3% monthly increase. On an annual basis, prices rose 4.4% from a year earlier in January, slower than the 4.6% in December and the smallest 12-month increase since January 2022.
“As we saw through 2024, shelter inflation will continue to take time to get back to reasonable levels,” Josh Hirt, Vanguard senior US economist, said in an email after the release.
The rent index rose 0.3% in January, matching December’s pace of 0.3%. Meanwhile, prices for owners’ equivalent rent increased 0.3% for the month, unchanged from January’s 0.3% gain. Owners’ equivalent rent is the estimated rent a homeowner would pay if they were renting their own property.
Meanwhile the lodging away from home index rose 1.4% in January after falling 0.5% in December, and household insurance accelerated 1.1% last month.
“We continue to hold the view that shelter inflation will eventually moderate over the course of 2025,” Hirt added.
-
Used car prices jump most since May 2023 and could push higher as inventory shrinks
Yahoo Finance’s Pras Subramanian reports:
New and used car prices were mixed to start the year in January’s Consumer Price Index (CPI) reading, but used prices continued trending higher, with January’s jump the largest since May 2023.
New car prices were flat in January and down 0.3% compared to a year ago, whereas used vehicles popped 2.2% in January and were up 1.0% for the year.
This comes as overall prices in the US rose 0.5% over the previous month, the largest monthly headline increase since August 2023 and a slight acceleration from the 0.4% rise seen in December. Year-over-year prices rose 3.0% over the prior year in January, an uptick from December’s 2.9% annual gain in prices.
-
Nasdaq hits the green as Tesla rallies
Stocks rallied off their lows of the day throughout Wednesday as the Nasdaq Composite narrowly crossed into positive territory around 12:30 p.m. ET.
Tesla (TSLA) proved to be a key catalyst for the tech-heavy index as shares rallied more than 4%.
-
CVS stock pops after topping earnings expectations
Yahoo Finance’s Anjalee Khemlani reports:
CVS (CVS) reported fourth quarter and full-year 2024 earnings Wednesday, beating Wall Street’s expectations and sending its stock up more than 14%.
Full-year revenue came in at $372.8 billion, while fourth quarter revenue was $97.7 billion compared to Wall Street’s expectations of $96.8 billion. The healthcare benefits segment, which includes its various insurance products, was down slightly, with ongoing Medicare and Medicaid headwinds, which have also impacted its peers, dragging the company’s revenue.
Still, its healthcare services segment increased, as well as its retail pharmaceutical business, at a time when the business model is struggling.
-
The interest rate path remains ‘uncertain,’ Powell says
When asked directly about President Trump’s tariffs and how they could impact the Federal Reserve’s monetary policy path, Fed Chair Jerome Powell admitted it’s rather unclear.
As he did during a Jan. 29 press conference, Powell stressed there is increased uncertainty right now as the Fed waits to hear what exactly happens with Trump’s policy. He added that while tariffs could impact the economic outlook and cause the Fed to change its monetary policy plans, the central bank is also watching immigration, fiscal policy, and regulatory policy.
Powell said they can’t assess how any of those factors will impact the economic outlook until it’s clear what policies are actually being put into place.
For now, Powell said Wednesday’s January CPI reading showed similar signs to what the Fed has been seeing.
Powell said inflation is “close” to the Fed’s 2% goal but “we’re not there yet.”
-
Trump shrugs off hot data as ‘Biden inflation’, calls for lower rates
Yahoo Finance’s Ben Werschkul reports:
Donald Trump on Wednesday morning dismissed a higher-than-expected inflation report as “Biden inflation” after making another call to lower interest rates.
The US president reacted to the release of the data showing headline consumer prices rose more than forecast by posting “BIDEN INFLATION UP!” on Truth Social.
The post came just an hour after another post earlier Wednesday morning that read “Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!!”
-
Markets trim Fed rate cut bets
Yahoo Finance’s Jennifer Schonberger reports:
A hotter-than-expected inflation reading at the start of 2025 makes it much more likely that the Federal Reserve will keep rates on hold for the foreseeable future, reinforcing a cautionary stance from Fed Chair Jerome Powell and other central bank policymakers.
After the latest data from the Bureau of Labor Statistics showed that the Consumer Price Index (CPI) rose more than forecast in January, traders reduced their expectations for rate cuts in 2025 to just one — and not until much later in the year.
“It really does push the timeline into the second half of the year if things go well,” Claudia Sahm, chief economist at New Century Advisors and former Fed economist, told Yahoo Finance.
-
Inflation rises more than expected in January
New data from the Bureau of Labor Statistics out Wednesday showed that a key inflation metric rose more than anticipated in January.
On a “core” basis, which strips out the more volatile costs of food and gas, the January Consumer Price Index (CPI) climbed 0.4% over the prior month, an acceleration from December’s 0.2% monthly gain and above the 0.3% economists had expected. On an annual basis, prices rose 3.3%, above the 3.1% economists had projected.
Headline consumer prices also rose more than expected. The CPI increased 3% over the prior year in January, an uptick from December’s 2.9% annual gain in prices. The yearly increase was above the 2.9% economists had expected.
The index rose 0.4% over the previous month, ahead of the 0.3% increase seen in November and also on par with economists’ estimates.
-
JPMorgan: S&P 500 at risk of falling 2% if inflation runs hot
The S&P 500’s (^GSPC) record run could face a setback, according to JPMorgan Market Intelligence. The team estimates the index may drop up to 2% if the Consumer Price Index (CPI) rises 0.4% or more in January from the previous month.
With CPI data due at 8:30 a.m. New York time, markets are on edge. A slightly hotter print could challenge the bullish outlook on US equities. The consensus estimate is for a 0.3% rise in month-on-month CPI.
-
Europe stocks marooned in wait for CPI
Stocks in Europe trod water on Wednesday, mirroring the muted tone in markets as investors prepared for a fresh reading on US consumer inflation.
The pan-European Stoxx 600 (^STOXX) index inched up less than 0.1%, staying in range of fresh record highs thanks to solid earnings from the likes of Heineken (HEIA.AS, HEINY).
In individual benchmarks, Germany’s DAX (^GDAXI) rose 0.3%, while the CAC (^FCHI) in Paris traded flat. London’s FTSE 100 index (^FTSE) hugged the flat line.
-
Gold hits brakes on record-setting rally
Gold (GC=F) continued to pull back from a recent all-time high on Wednesda, as traders assessed Jerome Powell’s message that the Fed isn’t in a hurry to cut interest rates.
Prices of gold bullion dropped below $2,890 an ounce, falling for a second day, after a record-setting run toward the key $3,000 level.
Meanwhile, gold futures slid almost 1% to around $2,906 an ounce, with the shine coming off the non-interest-bearing asset as the 10-year Treasury yield (^TNX) rose.
Prices for the metal have surged in recent days as investors seek out less risky assets in light of President Trump’s push for tariff hikes.
-
Good morning. Here’s what’s happening today.
Economic data: Consumer Price Index (January); Real average hourly earnings (January); MBA Mortgage Applications (week ending Feb. 7)
Earnings: Albemarle (ALB), Biogen (BIIB), CVS Health (CVS), Cisco (CSCO), Dutch Bros (BROS), Generac (GNRC), Kraft Heinz (KHC), MGM Resorts (MGM), Reddit (RDDT), Robinhood (HOOD), The TradeDesk (TTD)
Here are some of the biggest stories you may have missed overnight and early this morning:
CPI inflation on deck: What to watch with Fed cuts in focus
Trump’s crypto company launches strategic ‘token reserve’
Alibaba’s shares soar after investors buy iPhone AI hopes
Analyst: Musk’s OpenAI bid a ‘distraction’ dragging Tesla stock
Gold’s record rally hits pause after Powell’s speech
Bets on higher US rates face inflation data test
Why healthcare is the ‘best hedge’ if the AI rally cools in 2025
-
China stock surge has analysts bullish
China’s AI-driven stock surge is gaining backing from Wall Street strategists, who believe the country’s emerging tech capabilities will help sustain the bull market.
Analysts from Morgan Stanley (MS), JPMorgan Chase & Co (JPM), and UBS Group AG (UBS) predict that stock gains fueled by DeepSeek’s artificial intelligence model will continue.
![i’m-nervous,-too!-[part-2]](https://10xwealthreport.com/wp-content/uploads/2026/03/177042-im-nervous-too-part-2-1568x784.jpg)
