Tuesday night’s flat closing price for US stocks followed the Dow Jones Industrial Average’s worst drop since March 2023.
Dow-linked futures fell 15 points, or 0.04%. Futures on the S&P 500 edged up 0.02%, while those on the Nasdaq 100 gained 0.07%.
Following the release of better-than-expected fourth-quarter profits, Lyft’s shares surged more than 16% in after-hours trade. Even though the company exceeded revenue projections in its most recent quarter, Airbnb saw a decline of more than 4%.
The 30-stock Dow lost 1.35% during Tuesday’s regular session, marking the worst day since March 2023. The Nasdaq Composite fell 1.8%, while the S&P 500 lost 1.37%. The sell-off was sparked by an inflation reading that was higher than expected, which worried speculators that the Federal Reserve might not lower interest rates. The sell-off was sparked by a higher-than-expected inflation number, which made traders nervous that the Federal Reserve might not lower interest rates as soon as they had planned.
The monthly increase in the consumer price index was 0.3% in January, while the annual increase was 3.1%. A 2.9% increase from the previous year and a 0.2% increase month over month were predicted by economists surveyed by Dow Jones.
Terry Sandven, chief equities strategist at U.S. Bank Wealth Management, says that even while the January CPI report probably moves the probability of a Fed rate cut to the second half of 2024, against investors’ initial expectations of rate cuts as early as March, the market surge is still intact.
The retreat on Tuesday “allows valuations to come a bit more in line with fundamentals.” The reset gives investors oriented toward reasonable valuations an opportunity to perhaps get into the market,” he mentioned.
“But importantly, with inflation, interest rates and earnings still being supportive of higher equity prices, we do not believe this is the beginning of the end, with a prolonged downturn in front of us,” Sandven added.
Wall Street will be watching for remarks from Chicago Fed President Austan Goolsbee on Wednesday.
Numerous well-known companies are reporting their earnings; on Wednesday morning, Kraft Heinz and Generac were among them. Following the closure, Occidental Petroleum and Cisco Systems will release their results.