Stocks Trim Losses After Hot Inflation, Bonds Remain Pressured, Tesla Rebounds: What's Driving Markets Wednesday?

A hotter-than-expected inflation report initially rattled markets on Wednesday morning, but investors found confidence to buy the dip, helping major indexes recover most losses by midday trading in New York.

The S&P 500 was down 0.2%, while the Nasdaq 100 was flat, both rebounding from sharp declines following the January Consumer Price Index report. Small-cap stocks underperformed, with the Russell 2000 slipping 0.8%.

The headline CPI rose 3% year over year in January, surpassing both December's 2.9% reading and economist forecasts of 2.9%. On a monthly basis, inflation increased 0.5%, outpacing expectations of 0.3% and accelerating from December's 0.4% gain. This marked the fastest monthly inflation rate since August 2023.

Core inflation, which excludes food and energy, climbed to 3.3% year over year from 3.2% in December. On a monthly basis, core CPI increased 0.4%, exceeding estimates of 0.3% and doubling December's 0.2% rise.

Treasuries and interest rate markets reacted sharply to the inflation data. Traders scaled back expectations for Federal Reserve rate cuts, now projecting only one reduction by December 2025.

Treasury yields surged, reflecting heightened investor uncertainty. The 10-year Treasury yield jumped 10 basis points to 4.64%. The iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) fell 1%.

Despite rising Treasury yields and a stronger dollar, gold edged up 0.2% to $2,910 per ounce. Oil prices dropped 2% after reports that Donald Trump spoke with Russian President Vladimir Putin, fueling speculation about a potential ceasefire in Ukraine.

Bitcoin (CRYPTO: BTC) also rebounded from earlier session losses.

Wednesday’s Performance In Major US Indices, ETFs

Major Indices	Price	1-day %chg
Nasdaq 100	21,688.40	0.0%
S&P 500	6,056.85	-0.2%
Dow Jones	44,411.00	-0.4%
Russell 2000	2,257.59	-0.8%

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust (NYSE:SPY) inched 0.2% down to $603.77.
• The SPDR Dow Jones Industrial Average (NYSE:DIA) was 0.4% down to $444.41.
• The tech-heavy Invesco QQQ Trust Series (NASDAQ:QQQ) flattened at $528.09.
• The iShares Russell 2000 ETF (NYSE:IWM) eased 0.8% to $224.
• The Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY) outperformed, up 0.4%; the Energy Select Sector SPDR Fund (NYSE:XLE) lagged, down 1.2%.

Wednesday’s Stock Movers

• Tesla Inc. (NASDAQ:TSLA) jumped more than 4% after the electric vehicle maker tumbled 6.3% on Tuesday, reaching oversold levels and extending its losing streak to five consecutive sessions.

Stocks reacting to company earnings reports included:

• CVS Health Corp. (NYSE:CVS): up 15.7%
• Super Micro Computer Inc. (NASDAQ:SMCI): up 4.5%
• Edwards Lifesciences Corp. (NYSE:EW): up 5.6%
• América Móvil, S.A.B. de C.V. (NYSE:AMX): down 1.4%
• American International Group Inc. (NYSE:AIG): up 0.2%
• Energy Transfer LP (NYSE:ET): up 0.3%
• Southern Copper Corp. (NYSE:SCCO): up 2.9%
• Gilead Sciences Inc. (NASDAQ:GILD): up 6.8%
• Zillow Group Inc. (NASDAQ:Z): down 10.2%
• CME Group Inc. (NASDAQ:CME): up 2.2%
• Chimera Investment Corp. (NYSE:CIM): down 8.9%
• Ryder System Inc. (NYSE:R): up 4.0%
• Smurfit WestRock Plc (NYSE:SW): down 5.8%
• Sonic Automotive Inc. (NYSE:SAH): down 2.4%
• Alkermes Plc (NASDAQ:ALKS): up 4.1%
• Anavex Life Sciences Corp. (NASDAQ:AVXL): up 1.0%
• Biogen Inc. (NASDAQ:BIIB): down 4.6%
• Blackstone Mortgage Trust Inc. (NYSE:BXMT): up 2.8%
• Camtek Ltd/Israel (NASDAQ:CAMT): up 1.5%
• Chefs' Warehouse Inc. (NASDAQ:CHEF): up 13.0%
• Diebold Nixdorf Inc. (NYSE:DBD): down 3.2%
• Dominion Energy Inc. (NYSE:D): up 0.6%
• Exelon Corp. (NASDAQ:EXC): up 0.4%

Read Next:

• Record-High Egg Prices Drive Inflation Higher In January

Illustration created using artificial intelligence via Midjourney.