CPI slumped interest rate cut expectations, the Dow fell more than 500 points, and Arm fell more than 14%

Edited by: Bi Luming

On February 13, Eastern time, the three major U.S. stock indexes collectively opened lower. As of press time, the Dow fell 1.36%, down more than 500 points, the Nasdaq fell 1.80%, and the S&P 500 fell 1.45%.

Most of the large technology stocks fell, with Nvidia, Tesla, Microsoft, and Meta falling more than 2%. Arm opened more than 13% lower today, and as of press time, the stock fell 14%, and it closed up 29.3% on Monday.

Spot gold plunged sharply intraday, approaching the $2,000 mark for the first time since December 13 last year.

On the news side, the US blockbuster inflation report for January 2024 was released. US CPI rose 3.1% year-on-year in January, with an expected increase of 2.9%, and January CPI increased by 0.3% month-on-month, with an expected increase of 0.2%. US core CPI rose 3.9% year-on-year in January, with an expected increase of 3.7%, and core CPI in January increased by 0.4% month-on-month, with an expected increase of 0.3%. The latest data highlights the persistence of inflationary pressures in the United States and the bumpy road to fighting inflation. The market reacted strongly and pulled back on expectations of a Fed rate cut.

After the fourth consecutive "standing still" at the interest rate meeting on February 1, Beijing time, Federal Reserve officials have recently spoken intensively.

According to Xinhua Finance (the same below) on February 7, Federal Reserve official Mester said that he is still inclined to cut interest rates three times in 2024, but is unwilling to provide a schedule for interest rate cuts, believing that there is no urgency to cut interest rates. At the same time, Mester said more data is needed before the interest rate can be decided.

Federal Reserve official Harker also said that keeping interest rates unchanged was the right move, and the Fed saw "substantial progress" in returning inflation to 2%.

Going back, on CBS's 60 Minutes broadcast on February 4, Fed Chairman Jerome Powell said that the Federal Open Market Committee, which sets monetary policy, is unlikely to agree to a rate cut in March.

In fact, on February 1, the Fed kept the target range for the federal funds rate unchanged between 5.25% and 5.5% at its first interest rate meeting in 2024. At the time, he said the FOMC was unlikely to reach a level of confidence in March and determined that March was the time to cut interest rates.

According to a report by Securities Daily on February 7, Cheng Shi, chief economist of ICBC International, said in an interview with reporters that Powell's attitude is still vague about when the Fed will start cutting interest rates, but pointed out that the Fed will not be in a hurry.

In addition, the better-than-expected performance of some economic data has also made the Fed's path to interest rate cuts full of uncertainties. For example, the US non-farm payrolls in January rose by 353,000, almost double the consensus estimate of 185,000, on February 2. This larger-than-expected non-farm payrolls data even made the market worry that US inflation will still be repeated.

For this year's U.S. inflation, CITIC Securities Chief Economist Ming Ming told reporters that on the whole, U.S. inflationary pressure is more controllable this year, but it is also necessary to be vigilant against upside risks, especially the Fed's easing too early may lead to a recurrence of the inflation situation.

However, Ming Ming further said that although it is expected that it will be difficult for inflation in the United States to fall back to 2% this year, looking back on history, it is expected that the current inflation level will not be an obstacle to the Fed's interest rate cuts.

Daily Economic News, Xinhua Finance, Securities Daily