[New York Stock Market Briefing] Mixed Results Amid Hotter Than Expected Inflation... Meta Rises for 18th Consecutive Day

The major indices of the New York Stock Exchange showed volatility and ended mixed. It seems that the sell-off was triggered by the higher-than-expected inflation rate in the U.S. in January.

On the 12th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 44,368.56, down 225.09 points (0.5%) from the previous session. The Standard & Poor's (S&P) 500 Index fell 16.53 points (0.27%) to 6,051.97, while the tech-heavy Nasdaq Composite Index rose 6.09 points (0.03%) to close at 19,649.95.

The U.S. Consumer Price Index (CPI) for January exceeded market expectations and rose sharply, shocking the stock market.

According to the U.S. Department of Labor, the January CPI rose 0.5% from the previous month. This is the highest since August 2023 (0.5%) and exceeds the market expectation of 0.3%. The core CPI for January, excluding volatile food and energy, also rose 0.4% from the previous month, surpassing market forecasts. This is also the largest increase since March last year.

Such higher-than-expected inflation makes it difficult for the Federal Reserve (Fed) to maintain its rate-cutting stance. The expectation that the rate cut would occur only once this year is now considered unlikely due to the January CPI.

According to the Chicago Mercantile Exchange (CME) FedWatch Tool, the probability of a rate freeze in March jumped to 97.5% immediately after the January CPI was announced. The probability of the rate being frozen until June also surged from 50.3% at the close of the previous day to 66.7%.

Samir Samana, head of global equities and real assets at Wells Fargo, said, "The hotter-than-expected CPI confirmed investors' anxiety about inflation," adding, "Risk markets may rise further, but it won't be as smooth as the past two years."

Amid ongoing controversy over the overvaluation of the 'Magnificent 7' (M7) group of major tech stocks, Nvidia, a leading company in the AI field, fell 1.25% on the day, while Amazon (-1.65%), Alphabet (-0.92%), and Microsoft (-0.58%) also showed weakness. However, Apple (1.83%) and Tesla (2.44%), which have recently shown weak stock prices, closed strong.

Meta (0.78%) continued its upward trend for the 18th consecutive trading day. This is the longest consecutive rise since the Nasdaq 100 Index was calculated on January 31, 1985. After surpassing the $700 mark (based on closing price) for the first time in history on the 4th, it continues to reach new highs, with a market capitalization of $1.837 trillion, approaching $2 trillion.

Energy companies fell in tandem with the news that the U.S. and Russia would begin serious negotiations for a ceasefire in the Ukraine war, which is expected to smooth oil supply. ExxonMobil fell 3.01%, and Chevron dropped 1.61%.

The automotive and pharmaceutical sectors showed strength following comments from House Speaker Mike Johnson that they could be excluded from mutual tariffs. U.S. automaker GM rose 2.12%, and pharmaceutical company Eli Lilly gained 0.92%.

Energy company Chevron fell 1.61% on news of large-scale staff cuts and cost-saving restructuring. U.S. pharmacy chain CVS surged 15% on the back of a 'surprise earnings' announcement.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) fell 0.13 points (0.81%) to 15.89 from the previous session.

Reporter Goh Jung-sam, Hankyung.com jsk@hankyung.com