Finder makes money from featured partners, but editorial opinions are our own.

S&P 500 falls on hot inflation and hawkish Fed

S&P500 - Getty - 1800x1000

The S&P 500 falls as inflation comes in hotter than investors were expecting and the Fed comes out saying it will continue to lift rates.

In a familiar story for investors, the market is being dominated by the US inflation figure.

And while there was some hope that it was falling, the latest consumer price index and retail sales report shows both were higher than expected.

This means the Fed might have to go further to cut inflation.

In response the S&P 500 fell 1.38%. EV manufacturer Tesla traded down 5.69%, helping to drag down the index.

Meanwhile the Dow Jones Industrial Average fell 1.26%, namely due to household names Microsoft and Disney, while the tech-heavy Nasdaq Composite had the biggest falls, slipping 1.78%.

Fed calls for more rate rises

Inflation doesn't seem to be going away as fast as Wall Street would like.

Figures that came on Tuesday show inflation rose 0.5% in January according to the Bureau of Labor Statistics.

It means the year-on-year inflation is now at 6.4%. Even with these elevated rates, it's worth pointing out inflation is cooling, falling down from 6.5% in December.

After the consumer price index and retail sales reports were both higher than markets were expecting, it added weight to the Fed continuing to lift rates.

This is despite pushing the official cash rate up 7 months in 2022 and lifting in early 2023.

Overnight, St. Louis Fed president James Bullard came out in support of another 0.5% rate rise to the US cash rate, even after lifting rates 7 times in 2022.

"Continued policy rate increases can help lock in a disinflationary trend during 2023, even with ongoing growth and strong labor markets," Bullard said, in a speech to a business group in Jackson, Tennessee.

Looking for a low-cost online broker to invest in the stock market? Compare share trading platforms to start investing in stocks and ETFs.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involve substantial risk of loss and therefore are not appropriate for all investors. Past performance is not an indication of future results. Consider your own circumstances and obtain your own advice before making any trades.

Image: Getty Images

Ask a Question

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our 1. Terms Of Service and 6. Finder Group Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Go to site