Markets Tumble, VIX Up 8% On Hot Inflation Data, Dollar, Yields Jump As Traders Unwind Rate Cut Bets: What's Driving Markets Tuesday?

Author: Piero Cingari | February 13, 2024 03:13pm

Wall Street witnessed one of the worst sessions since the beginning of the year, with widespread declines across the board as stocks were hit by the impact of a higher-than-expected inflation report.

The Consumer Price Index (CPI) rose at a 3.1% annual rate in January, down from December’s 3.4% but surpassing expectations of 2.9%. Core inflation, which excludes energy and food prices, unexpectedly remained steady at 3.9%, failing to meet the anticipated decline to 3.7%. Monthly fluctuations also exceeded expectations, causing ripples in interest rate forecasts.

Traders swiftly adjusted their positions, lowering their expectations for rate cuts in 2024. March is now completely off the table, with the likelihood of the first cut by June at 76%, and almost fully priced by July. The anticipated number of rate cuts for 2024 has been reduced to four, down from nearly six just a couple of weeks ago.

Treasury yields surged across the board, with the 2-year yield rising by 15 basis points to 4.60%, and the 10-year yield by 10 basis points to 4.29%. The widely followed iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) plummeted 1.3%, reaching lows last seen in early December 2023.

Essentially, every major asset except the U.S. dollar saw declines on Tuesday. Volatility spiked once again, with the CBOE Volatility Index or VIX rising by 8%. Small-cap stocks were hit hardest, with the iShares Russell 2000 ETF (NYSE:IWM) dropping over 3%.

Bitcoin (CRYPTO: BTC) slumped by 1.5% after reaching $50,300 overnight, while gold, as tracked by the SPDR Gold Trust (NYSE:GLD), fell below $2,000 an ounce for the first time in two months.

Tuesday's Performance In Major Indices, ETFs

Major Indices & ETFs	Price	%
S&P 500	4,953.69	-1.4%
Dow Jones	38,218.67	-1.5%
Nasdaq 100	17,611.80	-1.5%
Russell 2000	1,944.94	-3.5%
CBOE VIX	15.05	8.0%

The SPDR S&P 500 ETF Trust (NYSE:SPY) was 1.4% lower to $493.76, the SPDR Dow Jones Industrial Average (NYSE:DIA) fell 1.5% to $382.25 and the tech-heavy Invesco QQQ Trust (NASDAQ:QQQ) dropped 1.6% to $436.72, according to Benzinga Pro data.

None of the eleven sectors comprising the S&P 500 experienced gains on Tuesday. The Real Estate SPDR Select Sector Fund (NYSE:XLRE) recorded the largest decline, dropping by 2.7%, closely followed by the Utilities SPDR Select Sector Fund (NYSE:XLU), down 2.2%.

Industry-wise, gold miners, tracked by the VanEck Gold Miners ETF (NYSE:GDX), and solar stocks, monitored through the Invesco Solar ETF (NYSE:TAN), were the underperformers, declining by 5.5% and 5%, respectively.

Tuesday’s Stock Movers

• Biogen Inc. (NASDAQ:BIIB) fell 7.5% after the company missed both earnings and revenue estimates last quarter.
• SSR Mining Inc. (NASDAQ:SSRM) fell 60%, marking the worst performance among Russell 1000 stocks, on suspension of operation at a mine in Turkey.
• Other companies reacting to earnings were Waste Management Inc. (NYSE:WM), Coca-Cola Company (NYSE:KO), down 1.7%, Moody’s Corp. (NYSE:MCO), down 7.6%, Marriot International (NASDAQ:MAR), down 6.3%, Zoetis Inc. (NYSE:ZTS), down 6%, Ecolab Inc. (NYSE:ECL), up 8.8%, Datadog Inc. (NASDAQ:DDOG), down 4.3%.
• Companies reporting after the closing bell are Airbnb Inc. (NASDAQ:ABNB), American International Group Inc. (NYSE:AIG), Welltower Inc. (NYSE:WELL).

Read now: Economists Sound Alarm On Inflation’s Stubborn Grip: ‘No Chance Inflation Will Return To 2%’ Without New Rate Hikes

Photo: Shutterstock

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