The Dow Jones Industrial Average plunged more than 500 points on Tuesday after hot inflation data for January dimmed hopes that the Federal Reserve would begin cutting interest rates next month.
The Dow, which tumbled as 750 points, slid 1.4% — its worst day since since March 2023. The S&P 500 slipped 1.4%, while the tech-heavy Nasdaq Composite fell 1.8%.
Both the Dow and the S&P 500 had hit record highs this year before plunging following the release of the Consumer Price Index, which rose a stiffer-than-expected 3.1% on an annual basis.
The figure — which tracks changes in the costs of everyday goods and services — remains far off from the Fed’s 2% target.
Core CPI a number that excludes volatile food and energy prices increased 0.4% in January, to 3.9%.
The figure, a closely-watched gauge among policymakers for long-term trends, was also higher than what economists anticipated.
“Inflation staying sticky is everyone’s biggest fear and this report is showing its not going down,” Chris Zaccarelli, the chief investment officer of Independent Advisor Alliance, said. “The knee- jerk reaction is for stocks and bonds to sell off. That makes sense. Then we’ll wait for the next report and if that’s lower this will turn out to be just a blip.”
The increase could delay the prospect of three interest rate cuts the Fed anticipates to make in 2024.
Wall Street had initially expected that the first time rates were brought down from their current 22-year high would be in March.
Fed Chair Jerome Powell said after the latest policy meeting that “it’s not likely that this committee will reach that level of confidence in time for the March meeting.”
The CME FedWatch Tool shows that a May rate is also largely off the table.
The probability of a May rate cut slumped from 52.2% to 36.6% on Monday while the chance of a slash in June now stands at 78.6%, down from 92.2%.
Atlanta Fed President Raphael Bostic, who is voting on the Federal Open Market Committees policy decisions this year, told CNN that he’s anticipating the first of three cuts to take place in the fourth quarter — weeks after the mid-year slowdown Wall Street is now expecting.
By the end of the year, inflation will be near “the lower twos,” he said.
This isnt a TikTok video or something like that where you get trends happening so fast. It takes a while for the decisions of individual decisions and millions of people to come together and to start to create trends, he told CNN.
At the same time, theres a significant risk if the Fed leaves interest rates where they currently are for too long, Bostic warned.
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He also noted how difficult it’s been to tamp down inflation as the job market has remained surprisingly strong.
Januarys monthly jobs report added a blockbuster 353,000 new jobs to the economy — nearly double analysts’ expectations.
Although inflation appears to be slowing, the economy remains Americans overall top concern, cited by 22% of poll respondents, as they have struggled with inflation and other aftershocks of the COVID-19 pandemic, according to a Reuters/Ipsos poll released last month.
Since taking office, Biden has made a pitch for lower supermarket prices, pushed drug makers to lower insulin costs, hotel chains to reduce fees and tried to diversify the meat-packing industry after beef prices skyrocketed in the aftermath of the pandemic.
Alfredo Ortiz, president and CEO of Job Creators Network, told The Post in a statement that “inflation remains historically high and is nothing to cheer about.”
“Talk to any American going to the grocery store, hardware store or pharmacy, and they’ll tell you prices continue to rise at a painful rate.”
A December 2023 report on shrinkflation — when businesses cut product sizes but keep prices the same — found that household paper products were 34.9% more expensive per unit than they were in January 2019, with about 10.3% of the increase due to producers shrinking the sizes of rolls and packages.
Researchers also found that the price of snacks like Oreos and Doritos had gone up 26.4% over the same period, with shrinking portions accounting for 9.8% percent of the increase.
Elon Musk’s SpaceX has successfully performed another launch of its Starship rocket in front of President-elect Donald Trump, but the test flight did not go perfectly.
The 400ft (122m) high rocket system, designed to land astronauts on the moon and ferry crews to Mars, lifted off from Boca Chica, Texas.
The first stage, called Super Heavy, unexpectedly made a splashdown in the Gulf of Mexico instead of attempting to return to its launchpad, indicating something went wrong.
Mr Trump’s appearance signals a deepening alliance with Mr Musk, who stands to benefit from his recent election victory.
The billionaire entrepreneur is expected to secure favourable government treatment, not only for SpaceX but also Tesla, and help his companies.
Mr Trump has also appointed Mr Musk as co-leader of a new government efficiency project.
After separating from the Starship second stage, the booster returned to Boca Chica in Texas, where it was supposed to be grabbed and clamped in place using what the company describes as “chopsticks”.
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Arguably, they look more like massive pincers mounted on a huge steel tower.
Elon Musk will be very disappointed by the failure to catch the booster with Donald Trump watching on.
This was their moment to show their prowess in efficiency, reusability, the “fail-fast efficiency” that Donald Trump really wants his presidency to embody.
Donald Trump isn’t somebody who wants to be associated with things that don’t look brilliant or work amazingly.
Instead, Trump wanted to be associated with Musk’s glory and that hasn’t happened.
This was a flight test with a political moment tagged on to it and I think it will have been not the outcome that any party wanted to see.
Step towards moon trip
It was the sixth test for the world’s biggest and most powerful rocket that SpaceX and NASA hope to use to get astronauts back on the moon and eventually Mars.
Among the objectives for the test were igniting one of the engines in space and thermal protection experiments aboard the spacecraft.
SpaceX wants to eventually return and reuse the entire Starship, as full-scale recycling would drive down the cost of hauling cargo and people into space.
NASA is paying SpaceX more than $4bn (£3.1bn) to land astronauts on the moon via Starship on back-to-back missions later this decade.
But that doesn’t mean there’s not a reason to be outraged. Indeed, it means the committee had a whole week to fix the mistakes it had already made, and it chose not to!
So, who should be most angry this week? Grab a pillow to scream into and a stress ball to clutch. We’ve got a lot to get off our chests.
A fact the committee made clear this week: Beating Mercer by 45 points is better than sitting at home on the couch.
So it is that Alabama, which was ranked behind Miami last week, beat up on a hapless FCS opponent and jumped Miami during the Canes’ open date.
Was there a message in this?
Surely, the message could be that taking the week off isn’t something to be rewarded, but we’re betting that’s not a message the committee wants to send while coaches are arguing about the value of playing in a conference title game.
Is the message that blowing out a team from the Southern Conference is really impressive? All due respect to UMass-Lowell, but we doubt it.
No, the message seems to be that the ACC needs to understand its place in the pecking order, and the line starts behind Alabama. Funny, because we thought the ACC already got that message last year, when Florida State was left out.
Alas, Miami went from No. 4 in the first rankings all the way to No. 8 now, thanks to a one-possession loss to a solid (and underrated) Georgia Tech team. But is that fair?
Miami has four wins over SP+ top-40 teams this season — the same number as Alabama and twice as many as Notre Dame.
Miami has a better loss than either of the two teams directly in front of it: Georgia Tech is No. 55 by SP+. Vanderbilt (one of two losses for Alabama, remember) is No. 61. Northern Illinois, which beat Notre Dame in South Bend, is No. 84.
Miami’s problem, of course, is it lacks a signature win. Notre Dame has Texas A&M. Alabama has Georgia. Miami has … Florida ?
So perhaps the Canes shouldn’t be quite as mad at the committee here as they should be furious with Louisville. The Cardinals were the lynchpin victory for both Miami and SMU (and helped Notre Dame, too), but they bungled their way to a loss to Stanford that will be studied by future generations as a model of ineptitude.
That the committee has woefully undervalued SMU all season, has shoved Miami behind the two-loss Tide, and thinks Clemson is worse than Colorado is the real message here though. The ACC is a one-bid league. The committee is spelling it out loud and clear.
Let’s state something at the top: Texas is probably quite good. It is, of course, not the Longhorns’ fault they joined the SEC and still drew a Big 12-caliber schedule. But facts are facts, and in a conference with six eight-win teams and four more already bowl eligible, Texas has played exactly two Power 4 opponents with a winning record this season. Those games resulted in a three-point win over Vanderbilt and a shellacking by Georgia.
But Texas has one loss, and the rest of the SEC competition has two or three. Is that all that should matter?
Will be interesting to see the SEC pecking order, and it’s hard to fault Texas for the schedule it was handed… but 1 team is not like the others here. pic.twitter.com/K6yISrTFN5
Ultimately, winning games is the most important thing, and the committee seems to recognize that with Indiana at No. 5, despite a schedule that might well have included a home game against Bishop Sycamore.
But is it all that matters? If Texas played Georgia’s schedule, would it still have a better record? Their head-to-head meeting would suggest otherwise.
Again, it’s hardly Texas’ fault the SEC rolled out the red carpet in Year 1. But it is up to Texas to impress when the spotlight is on, and since the blowout win against Michigan — a team vastly overrated at the time — the marquee moments have been mostly meh, right up to last week’s mediocrity against Arkansas.
Ultimately, an incredibly good SEC team — Georgia, Ole Miss, Tennessee, Texas A&M, South Carolina or Alabama — is going to end up having played a markedly tougher schedule, proved they can hang with the best of the best, and either go on the road for a arduous opening-round matchup or be left out altogether.
(Seriously, how is Georgia the 10th-best team in the country? There’s no logical argument.)
But Texas? Even with a loss to A&M, it’s hard to see the Horns falling from No. 3 to a place outside the top 11.
There’s a good case to be made that the Jayhawks are an incredibly undervalued opponent right now. They opened the season ranked in the top 25, they’re just rounding into shape now, and they’ve been incredibly unlucky, going 1-5 in one-possession games. SP+ ranks Kansas as a better loss than Vandy or Georgia Tech. And BYU was still probably the better team in that game, but a special teams miscue cost the Cougars a win.
So what? BYU probably should’ve lost to SMU or Oklahoma State or Utah, and karma is a real jerk.
Still, let’s compare some résumés here.
Team A: 9-1, No. 13 strength of record, best win vs. SP+ No. 12, loss to SP+ No. 84, 3 wins vs. bowl-eligible Power 4 teams
Team B: 9-1, No. 15 strength of record, best win vs. SP+ No. 46, loss to SP+ No. 5, 0 wins vs. bowl-eligible Power 4 teams
Team C: 9-1, No. 9 strength of record, best win vs. SP+ No. 22, loss to SP+ No. 55, 2 wins vs. bowl-eligible Power 4 teams
Team D: 9-1, No. 8 strength of record, best win vs. SP+ No. 13, loss to SP+ No. 42, 3 wins vs. bowl-eligible Power 4 teams
They’re all in roughly the same demographic, sure, but if you’re splitting hairs, it’s hard not to split them in Team D’s direction, right?
Well, of course, Team D is BYU. And, of course, Team A (Notre Dame), B (Boise State) and C (Miami) are all ranked higher.
Way back when the playoff began and the committee was launched, the idea was not to adjust the rankings entirely off the previous week — sending teams that lose tumbling and teams that win inching up as attrition occurs above them — but to view each team’s résumé anew each week. But this committee is acting every bit like the AP voters of old — dropping Miami and Georgia and Tennessee and, particularly, BYU, because of recency bias rather than the sum total of the results. Heck, BYU is now behind SMU — a team with the same record the Cougars beat head to head!
And the real issue here? With BYU, Colorado and Arizona State all now ranked behind Boise State, the odds of the Big 12 missing an opening-round bye are looking pretty strong.
Maybe Coach Prime should use some of his considerable air time to mention that.
Speaking of Coach Prime, here we are again with the clearly superior two-loss Big 12 team ranked five spots behind Colorado.
Same record. Arizona State’s worst loss was by 10 without its starting quarterback. Colorado was blown out by Nebraska. ASU’s best win is against SP+ No. 18; Colorado’s is No. 49.
And, if we’re being honest, Kenny Dillingham’s postgame rants this season have been more entertaining than Deion’s, too.
ASU coach labels kicking game ‘atrocious,’ confirms tryouts for Monday
ASU coach Kenny Dillingham labels his team’s kicking game “atrocious” and says it will be hosting open tryouts on Monday.
This is a mistake by the committee, plain and simple.
5. The Power 4
We won’t get to say this very often, but the power players are getting screwed.
OK, not really. The SEC and Big Ten will be fine, and even if they’re not, they can cry themselves to sleep on giant piles of money.
But the fact remains that Boise State is primed for a first-round bye, and this week’s top 25 includes four teams from outside the traditional power conferences: Boise State, Army, Tulane and UNLV.
That’s the most during any one week since the final poll of the 2021 season that featured five, but among those were Houston, Cincinnati and BYU — all power conference teams now. Only twice before have four teams not currently in a power conference league (or the Pac-12) been ranked concurrently — in the wild COVID year of 2020, and for a single week in 2019 with Boise State, App State, Memphis and Navy.
Somewhere, Greg Sankey is diabolically petting a cat in an oversized chair and plotting revenge.
Also Angry: Duke, Pitt, Kansas State, Syracuse, James Madison and Washington State (all 7-3 or better, unranked and with more wins vs. bowl-eligible Power 4 teams than Illinois), SMU (9-1, No. 13), Georgia (8-2, No. 10. Seriously, who thinks there are nine better teams?)