The stock market falls after inflation report

Shares and bonds fell on Wednesday when fresh inflation data highlighted Wall Street’s sensitivity to rising price across the economy that accelerated again.

The S&P 500 fell as much as 1.1 percent in the early breakfast trade before moderating after testimony from Jerome H. Powell, Federal Reserve President, before Congress, as he acknowledged that there was more to do to slow down inflation, although The central bank was to get close to its 2 percent target.

Nasdaq Composite Index, which is full of tech shares that have recently come under pressure from rising global competition to develop the chips that will drive the development of artificial intelligence also fell originally before he gathered to act flat In the afternoon.

Data from Bureau of Labor Statistics on Wednesday showed that prices rose 3 percent for the year through January, more than analysts had expected. It’s up from 2.9 percent in December. The “core” consumer price index, which excludes unstable food and energy prices, rose 3.3 percent years over years.

Signs of continued prItes are likely to encourage bold to refrain from further interest rates in the coming months. For equity investors, higher interest rates mean slower business activity that can weigh the company’s earnings and stock prices.

The 10-year Treasury Yield, a benchmark interest rate, from which a number of consumer and corporate loans in borrowing are calculated, increased 0.1 percentage points on Wednesday on course for its biggest movement higher in a single day since December.

Uptick in inflation in January “does not derail the prolonged downward trend in inflation,” said Kyle Chapman, a currency market analyst at Ballinger Group. But he said, “It confirms the consensus that cuts are coming much slower than we had thought at the end of last year.”

Investors are now betting that Fed will keep interest rates at their current level until December. It is a drastic shift in expectations since last year when dealers expected as many as four cuts in 2025, and even just a few weeks ago, investors expected the next cut in the rates as soon as June.

The two-year-old Treasury outcome, which is sensitive to changes in investors’ interest expectations, increased sharply after the inflation report, which up 0.1 percentage points to 4.36 percent, close to the highest level of the year. Yields are moving reverse to a bond price.

Wednesday’s market drop comes after an uneven three weeks for dealers, with whipsaw swings in stock prices that reflect the investors’ struggle to analyze the flurry of performing actions taken by President Trump since returning to the White House for another period.

The S&P 500 has increased approx. 3 percent since the start of the year and has pushed up 1 percent since the inauguration day despite volatility.

Adorable tariffs add to concern for an acceleration in inflation. On Monday, Mr. Trump Customs on foreign steel and aluminum. He has already imposed a 10 percent duty on Chinese goods, and spread 25 percent tariffs on Canada and Mexico are ready to take effect in March after he was delayed for a month.

“Rising prices are already appearing to be a headwind, and the prospect of new trading barriers has the potential for further fuel inflation pressure by increasing costs for businesses and consumers,” said Jason Pride, head of investment strategy and research at Glenmede, a wealth management.