Stocks Tumble as Hotter Inflation Data Dashes Hopes for Imminent Fed Rate Cut
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US stocks tumbled on Tuesday after a hotter-than-expected January inflation report showed prices cooling slower than forecasts anticipated. The Dow fell 1.4%, the S&P 500 dropped 1.4%, and the Nasdaq sank 1.8%.
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Core CPI, excluding food and energy, rose 0.4% in January, the largest monthly gain since April 2023. Headline CPI increased 3.1% annually, exceeding estimates but decelerating from December.
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The hot inflation data dampened hopes for an imminent Fed rate cut. Markets are now pricing in a nearly 80% chance of a rate cut in June rather than May.
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Interest rate sensitive areas like small caps and real estate sold off on expectations of fewer Fed rate cuts this year.
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Paramount Global announced layoffs of about 800 employees, or 3% of its workforce, as part of cost-cutting efforts amid buyout rumors. The media company's stock fell 4%.