Wall Street Slides as Inflation Rises Faster Than Expected

U.S. stocks took a hit on Wednesday as inflation data revealed higher-than-expected price increases for American consumers. The S&P 500 fell 0.3%, while the Dow Jones Industrial Average lost 225 points, or 0.5%. The Nasdaq Composite managed a slight gain of less than 0.1%.

Market losses were initially more severe, but stocks recovered slightly as oil prices dropped. A barrel of U.S. crude fell 2.7% below $72 after President Donald Trump announced he had reached an agreement with Russia to begin negotiations on ending the war in Ukraine. This raised hopes for a more stable global oil supply.

Despite this, investor sentiment remained cautious as Treasury yields climbed. January's inflation rate came in at 3%, exceeding the 2.9% expected by economists. Rising costs for essentials like gasoline and eggs fueled concerns that the Federal Reserve may hold off on cutting interest rates.

Some investors now see a nearly 30% chance the Fed won’t lower rates at all in 2025, up from less than 20% the day before. This pushed the 10-year Treasury yield to 4.62%, making riskier assets like stocks less attractive.

Gilead Sciences and CVS Health bucked the trend, gaining 7.5% and 14.9% respectively after strong earnings reports. However, Lyft fell 7.9% despite exceeding profit expectations, as revenue slightly missed forecasts.

Oil stocks also declined, with Exxon Mobil down 3% following a drop in Brent crude prices. Meanwhile, homebuilders struggled amid fears that high mortgage rates will persist.

Overseas, most European and Asian markets posted gains, contrasting Wall Street’s cautious mood.