Hold on! The three major benchmarks were poised to start the session on strong footing in the early going as investors awaited for inflation news. And then—bang!—they flipped solidly lower ahead of the open.
The widely watched Consumer Price Index (CPI) report released earlier offered another signal that inflation was on the rise. Within moments of the release, the trio moved sharply lower. The Labor Department’s report found that prices in January rose at a 0.5% clip, notably ahead of Wall Street’s expectations of a 0.4% gain. Core CPI, which strips out volatile food and energy prices, advanced by 0.3%, also higher than the 0.2% forecast.
The Dow Jones Industrials, which, in pre-market trading, was trending higher in triple digits ahead of the report, immediately shifted course, falling as much as 300 points within three minutes. That appeared to cool off by the open, with the Dow down 77 points at the open. The S&P 500 bounced around the flat line before the report was released. It was off by 7 points at the open while the Nasdaq Composite had stronger upward momentum that turned 24 points to the downside.
If the markets stay on that pace, they could upset the four-peat on session gains they appeared to be headed toward early on. Or they could have a repeat of yesterday’s session, when the markets reversed course to end higher in afternoon trading.
Yesterday’s turnabout might not exactly have been about fair play, but it looked to help the markets score a third straight day of gains. However, it didn’t help year-to-date change of the direction of the trio, which were still in negative territory.
The Dow started yesterday’s session off 180 points lower, but managed to edge up 0.2% at the close while the S&P 500 added 0.3% and the Nasdaq climbed 0.5%. As of early this morning, the Dow and S&P 500 were on track to record their worst monthly losses since August 2015, while Nasdaq’s pullback could be its poorest in two years.
Though it was a notable intraday swing for the Dow, some analysts said it might have been tied to a reluctance to make any drastic trades ahead of the today’s CPI report. Many said then that they feared that if the report showed further signs of inflation, it might tip the markets back into triple-digit losses—like it did early on.