Note: Figures recorded at 7:40am AEDT. Updated figures and a video recording will be available at 9am AEDT.
US stocks dropped on Tuesday after hotter-than-expected inflation data for January spiked Treasury yields and raised doubts that the Federal Reserve would be able to cut rates several times this year, a key part of the bull case for the equity market.
The Dow Jones Industrial Average lost 749 points, or 1.9%, its biggest drop since February 21 2023, when it lost 697 points to fall 2.06%. The S&P 500 slid 2%, while the Nasdaq Composite fell 2.3%.
The consumer price index rose 0.3% in January from December. CPI was up 3.1% on an annual basis. Economists polled by Dow Jones expected CPI to have increased by 0.2% month over month in January and 2.9% from a year earlier.
Core prices, which exclude volatile food and energy components, rose 0.4% month over month and 3.9% from a year ago. Core CPI was expected to have increased 0.3% in January and 3.7% from a year earlier, respectively.
The 2-year Treasury yield jumped above 4.63%, and the 10-year yieldtopped 4.29% following the CPI data. Tech shares including Microsoft and Amazon, which have steered the market run to record highs as rates declined, led the losses in trading Tuesday. Microsoft slid 2.2%, while Amazon fell 2.1%.
In corporate news, JetBlue Airways spiked 20% after activist investor Carl Icahn reported a nearly 10% stake in the airline. Toymaker Hasbro lost 3% after missing analyst expectations for the fourth quarter. Shares of Avis Budget Group slipped 22% on the back of disappointing fourth-quarter revenue.
The VIX Volatility Index surged to its highest level in three months, reaching 16.50 in late afternoon trading on Tuesday, surpassing its 200-day moving average of 15.08 and significantly exceeding the session low of 13.43. According to the CBOE, the VIX represents a 30-day expected volatility measure of the U.S. stock market, calculated from S&P 500 Index options prices, and has consistently traded above its 50-day moving average of 13.18.
Currency
One Australian dollar at 7.40am was buying 64.51 US cents.
Figures around the globe
European markets closed lower. London’s FTSE fell 0.81 per cent, Frankfurt lost 0.92 per cent, and Paris closed 0.84 per cent lower.
Turning to Asian markets, Tokyo’s Nikkei gained 2.89 per cent, Hong Kong’s Hang Seng and China’s Shanghai Composite were closed.
Yesterday, the Australian share market closed 0.15 per cent lower at 7,603.58.
Ex-dividends
Dicker Data (ASX:DDR) is paying 15 cents fully franked
Plato Inc Max (ASX:PL8) is paying 0.55 cents fully franked
VGI Partners Global (ASX:VG1) is paying 5 cents fully franked
Dividends payable
Mayfield Group Holdings Ltd (ASX:MYG)
Charter Hall Long WALE REIT (ASX:CLW)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
