Stocks slump to session lows after heated inflation report for January

• The CPI increased by a 7.5 % annual rate in January

•  Dow fell by nearly 400 points as investors brace themselves for the Fed’s measures to contain inflation

US stocks were trading near session lows on Thursday after U.S inflation rose rapidly in January, recording its highest level in four decades.

The Dow Jones Industrial Average fell by 421 points, or 1.2%, at 35,344. The S&P 500 was down 62 points, or 1.4%, to 4,524. The Nasdaq Composite lost 200 points, or 1.4%, to trade at 14,290.

Data released by the Labour Department showed that the consumer price index rose 0.6 % in January after rising 0.5 % in December. The CPI increased by a 7.5 % annual rate in January. This was the largest year-on-year gain since February 1982, and it came on the heels of a 7 % increase in December.

Also read: US inflation reaches 7.5 % in January, highest since February 1982

Analysts believe that markets are likely to remain volatile in the run-up to the March rate increase, with an intense focus on any inflation-related data, but are likely to calm down once the Fed provides more detail on the raising interest rates at its next meeting in March and introduce quantitative tightening in the months thereafter. 

Performance of other assets

Meanwhile, safer bets like Treasuries have seen yields rise as investors anticipate that January’s figures will strengthen the central bank’s plans to scale back its bond-purchasing program as quickly as possible. The benchmark 10-year Treasury note topped the 2% threshold for the first time since 2019, trading at 2.02% in afternoon action.

Read more: US Treasury yields bounce ahead of inflation report

West Texas Intermediate crude for March delivery fell 0.1% to $89.58 a barrel.

Shares of Disney (NYSE: DIS) rose 3.4% after the entertainment giant reported record revenue and a profit of more than $1 billion as it added streaming subscribers than expected over the holidays. Its theme-park profit surged.

The social media company, Twitter Inc. (NYSE: TWTR) shares rose 0.1% after results largely met expectations and the social media company announced a new $4 billion buyback program. 

(Inputs from MarketWatch)