Wall Street’s main indexes slipped on Tuesday following inflation data that was in line with estimates ahead of the U.S. Federal Reserve’s policy decision later in the week, while losses in energy stocks also weighed.
Consumer Price Index (CPI) rose 3.1% on an annual basis in line with estimates from economists polled by Reuters. Core prices, excluding volatile items like food and energy costs, also matched expectations, rising 4% annually.
On a month-on-month basis, consumer prices rose 0.1% last month, compared with estimates of it remaining unchanged.
Traders pared earlier bets that the Fed could start interest rate cuts as soon as March and are now pricing the U.S. central bank’s May meeting as the likeliest start for rate reductions.
“The Fed has been very clear they feel the risk of cutting rates too soon outweighs the risk of keeping them elevated for a longer period of time,” Chris Larkin, managing director of trading and investing at E*Trade, said.
“Today’s number aside … the trends still point to a slowing economy and cooling inflation. That means lower rates are still on the 2024 horizon, just not as near as some people may be hoping.”
Fed seen on policy hold until May as inflation edges up
Expectations that the U.S. central bank would start easing monetary policy from next year lifted the three main stock indexes to their ighest close for the year on Monday.
The two-day Fed monetary policy meeting is currently underway. The European Central Bank and the Bank of England are also scheduled to deliver their policy verdicts later this week.
Seven of the 11 major S&P 500 sectors were in the red, with the energy sector leading declines by 1.6% as crude prices slid over 2%.
At 9:45 a.m. ET, the Dow Jones Industrial Average was down 14.06 points, or 0.04%, at 36,390.87, the S&P 500 was down 13.23 points, or 0.29%, at 4,609.21, and the Nasdaq Composite was down 39.46 points, or 0.27%, at 14,393.03.
Among megacap stocks, Google-parent Alphabet lost 1.1%, after “Fortnite” maker Epic Games prevailed in its high-profile antitrust trial over the company.
Oracle fell 10.4% as the cloud services provider forecast third-quarter revenue below estimates on slowing demand for its cloud service.
Amgen rose 0.8%, limiting losses on the blue-chip Dow, after RBC Capital Markets upgraded the drugmaker’s shares to “outperform” from “sector perform”.
Lucid was down 9.1% after the electric-vehicle maker’s CFO Sherry House stepped down.
Airbnb fell 3% after Barclays downgraded the rental firm’s shares to “underweight” from “equal weight”.
Declining issues outnumbered advancers for a 2.49-to-1 ratio on the NYSE and a 2.28-to-1 ratio on the Nasdaq.
The S&P index recorded 33 new 52-week highs and one new low, while the Nasdaq recorded 40 new highs and 61 new lows.
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