US stock futures plummeted and the dollar surged on Wednesday, February 12, after data revealed consumer inflation increased more than expected in January. The Labor Department’s Bureau of Labor Statistics reported a 3% annual rise in the consumer price index, exceeding forecasts for a 2.9% increase. The core rate, excluding food and energy prices, rose to 3.3%, above projections of 3.1%.
The news sparked a market sell-off, with futures on the S&P 500 and Nasdaq dropping sharply by nearly 1%. The dollar rallied against various currencies, partly due to an uptick in US Treasury yields. Gold prices fell 1.1% to $2,869 per ounce.
Federal Reserve Chair Jerome Powell’s message that there is no rush to cut interest rates was reinforced by the data. Investors expect the Fed may only reduce rates once more this year, with just 26 basis points priced in by December. The prospect of tariffs on imported goods has prompted concerns about sustained inflation, leading some to believe the Fed will wait and see how tariff policy unfolds before making a move.
Investor attention is now focused on Powell’s second day of semi-annual testimony, which may shape market expectations for future rate decisions. President Trump’s advisers are finalizing plans for reciprocal tariffs on countries imposing levies on US imports, adding to inflation concerns.
Source: https://www.reuters.com/markets/global-markets-wrapup-1-2025-02-12