Stock Market Falls After Inflation Report
Published On Feb 12, 2025, 9:36 AM
Stocks and bonds experienced declines after new inflation data revealed higher than expected price increases. The S&P 500 and Nasdaq Composite indexes were affected, with the former dropping 1.1% in early trading. The inflation reading showed a 3% increase year-over-year as of January, prompting concern that the Federal Reserve may hold off on further interest rate cuts. This sustained inflation pressure is likely to dampen business activity and consequently company earnings, negatively impacting stock prices.
Stock Forecasts
SPY
Negative
The higher inflation data suggests that the Federal Reserve might not cut interest rates as anticipated, which could lead to a prolonged period of elevated rates and slower economic growth. This environment tends to be unfavorable for growth-focused tech stocks and could pressurize financial markets, particularly in sectors sensitive to interest rates.
TLT
Positive
With inflation pressures remaining high, consumer and corporate spending may decline as borrowing costs rise. This dynamic typically leads to slower business growth, making it likely that companies within sensitive sectors will report lower earnings, potentially lowering stock valuations of the broader market.
Related News
Trump calls for lower interest rates to go 'hand-in-hand' with tariffs: 'Lets rock and roll, America'
Feb 12, 2025, 9:05 AM
President Trump's comments come a day after Fed Chairman Jerome Powell said on Capitol Hill that the central bank doesn’t need to “hurry" to lower interest rates.
Stock market today: Dow, S&P 500, Nasdaq futures stall as key inflation report looms
Feb 12, 2025, 12:16 AM
Investors are keenly eyeing the CPI, which is due for release on Wednesday. Tariffs and earnings continue to set market expectations.
Trump readies matching tariffs on trade partners, possibly setting up a major economic showdown
Feb 12, 2025, 12:37 AM
President Donald Trump is taking additional action to upset the world trade system, with plans to sign an order as soon as Wednesday that would require that U.S. tariffs on imports match the tax rates charged by other countries. “It’s time to be reciprocal,” Trump told reporters earlier this week. As Trump has unleashed a series of tariffs after being in power for less than a month, he has fully taken ownership of the path of the U.S. economy.