Dow tumbles 500 points, posts worst day since March 2023 after hot inflation report: Live updates

Stocks closed lower on Tuesday after January's hotter-than-anticipated inflation report sent the equity market reeling early in the morning.

The Dow Jones Industrial Average dropped 524.63 points, or 1.35%, to settle at 38,272.75. It was the worst day for the 30-stock index since March 2023. The S&P 500 slipped 1.37% to close at 4,953.17, while the Nasdaq Composite shed 1.80% to finish at 15,655.60.

— Lisa Kailai Han

IPO activity may have dwindled in the past two years, but UBS believes it's time for a change.

"Globally, withdrawals and postponements rose to 54% of total IPO volumes in 2023, significantly higher than the 16.5% average between 2014 and 2021," wrote UBS' Mark Haefele. "Higher company valuations, lower market volatility, the potential for rate cuts, and optimism about an economic soft landing have led to a pickup in interest from company management teams looking for an entry point."

A pickup in IPO activity would greatly boost the financial sector, including banks, investment firms and private equity funds.

— Lisa Kailai Han

Communication services stocks saw more record inflows last week, according to Bank of America Securities.

The S&P 500 sector, which includes mega-cap tech stocks such as Meta Platforms, posted the second-ever largest level of inflows last week, wrote Jill Carey Hall, equity and quant strategist at the firm, in a Monday note.

That's only behind the all-time high reached in the prior week, BofA noted. It's also the 15th week of inflows, the longest buying streak of any sector in recent history. The firm uses data going back to 2008.

Most recently, a surprise dividend from Meta spurred more buying in the sector. In the week ending Feb. 2, shares of the Facebook-parent company surged more than 20% after it announced its first-ever dividend.

Meanwhile, tech and financials led outflows last week, while healthcare stocks saw a sixth-straight week of inflows.

— Sarah Min

After the S&P 500 climbed above the 5,000 level last week, UBS has one key question for investors: where do we go from here?

"While the commentary above paints a rosy picture, it's important to remember that a lot of the good news is already priced into markets," Solita Marcelli, the firm's chief investment officer Americas for UBS Global Wealth Management, wrote in a Monday note.

The market's performance so far this year has been a reflection of a "thriving economy," she added, noting that artificial intelligence and buzz around obesity drugs has been a key part of the market's value creation. To sustain further upside, Marcelli noted that more good news on the economy and a strong labor market is needed, that the market has to see AI monetization trends pick up and that persistent inflation will not delay interest rate cuts.

In the current market environment, Marcelli said UBS prefers quality stocks with strong returns on invested capital, strong margins and low debt, she said, and that small-cap stocks are currently more attractive than over large caps.

— Pia Singh

Oil futures rose Tuesday despite stubborn inflation in the U.S. that dragged the stock market lower.

The West Texas Intermediate contract for March gained 95 cents, or 1.24%, to settle at $77.87 a barrel. The Brent contract for April settled at $82.77 a barrel, up 77 cents or 0.94%.

WTI has struggled to break out of a range of about $68 to $78 a barrel amid uncertainty over war in the Middle East and an unclear supply and demand outlook for the year.

WTI and Brent are up about 8.68% and 7.44%, respectively, for the year, however.

— Spencer Kimball

The CBOE Volatility Index (VIX) spiked up to 16.50 in late afternoon trading Tuesday, its highest since Nov. 2, 2023, above the 200-day moving average of 15.08 and far above the session low of 13.43.

The CBOE defines the VIX as "a calculation designed to produce a measure of constant, 30-day expected volatility of the U.S. stock market, derived from real-time, mid-quote prices of S&P 500 Index call and put options."

The VIX had long ago traded above the 50-day moving average of 13.18.

— Scott Schnipper

The major averages were suffering keenly on Tuesday – and it's shaping up to be a notably bad session for the Dow Jones Industrial Average and the S&P 500.

The 30-stock Dow, now off by more than 700 points and down 1.9%, is pacing for its worst day since Feb. 21, 2023. On that day, the blue-chip index lost 2.06%.

The S&P 500 is also tracking for its worst session since Feb. 21, 2023, off by 1.9%. On that difficult day last February, the broad market index shed 2%.

The Nasdaq Composite, down 2.3%, is now tracking for its worst day since Oct. 25, 2023. Back then, it fell 2.43%.

— Darla Mercado, Gina Francolla

The S&P 500 could be in store for a slight slowdown after finding more momentum in February, according to RBC Wealth Management.

"Although we expect the S&P [500] to take a healthy breather after accelerating again in February, our expectation is that this weakness will result in a sideways, choppy trading range rather than a major intermediate-term correction," RBC technical strategist Robert Sluymer wrote in a Monday note.

The benchmark index is riding a five-week winning streak alongside the Nasdaq Composite and Dow Jones Industrial Average. Stocks are lower in Tuesday trading following a hotter-than-expected January inflation report.

— Brian Evans

The S&P 500 selloff was broad-based in afternoon trading, when losses accelerated following a hotter-than-expected inflation report.

In the 2 o'clock hour, the broad market index was down by 1.8%, with 465 names trading in negative territory.

— Sarah Min

All 11 sectors that comprise the broad S&P 500 traded down at least 1% Tuesday afternoon. As a whole, the benchmark index lost about 1.8%.

Real estate stocks led the index lower, hurt by 5% drops in Boston Properties and Alexandria Real Estate Equities. The utilities and consumer discretionary sectors also weighed on the S&P 500, with each down more than 2%.

On the other hand, health care saw the smallest drop with a slide of 1.2%. Losses for the sector were mitigated by rallies of more than 2% in Incyte and McKesson.

— Alex Harring

The 10-year Treasury note yield shot up more than 10 basis points following the release of hotter-than-expected inflation data for January. The benchmark rate also hit its highest level in more than two months and was last at around 4.28%.

Going forward the next key level for the 10-year will be around 4.35% to 4.36%, according to Gregory Faranello of AmeriVet Securities.

"If we start breaking through that level, then I think it gets a little interesting," the firm's head of U.S. rates strategy told CNBC. "You could get some fast money accounts that try and lean into it a little bit and test people."

Faranello also noted 4.35% was a "key level" before the 10-year broke out to its 2023 highs above 5%.

— Fred Imbert

Tuesday's stronger-than-expected consumer prices data is a step in the wrong direction in the fight against inflation, according to David Russell, global head of market strategy at TradeStation.

"We've made two steps forward in the fight against inflation, and now we take one step back," he said.

While the data can thwart optimism around a cut to interest rates at the May Federal Reserve policy meeting, he noted there's "noise" in categories like auto insurance and rent within the consumer price index.

"It gives investors reason to pause following the recent strong rally in stocks," Russell said. "But the damage could be limited given the potential for revisions."

— Alex Harring

A hotter-than-expected inflation print is "not entirely unusual" for January, but it does move out expectations of a rate cut from the Federal Reserve, according to Sonu Varghese, global macro strategist at Carson Group.

"CPI was hotter than expected, but this is not entirely unusual for January given seasonal adjustments, and something we saw the past two Januarys," Varghese wrote. "That said, this probably puts a final nail in the coffin for a March rate cut, and even makes May less likely."

Markets are currently pricing in an 8.5% chance of a quarter percentage point cut in March, down from 16% the prior day, according to the CME FedWatch Tool. In May, the likelihood of a quarter point cut dropped 35% from 52% previously.

— Sarah Min

The consumer price index reading for January came in hotter than expected, but the longer-term trend of cooling inflation is what consumers should be focusing on, according to White House press secretary Karine Jean-Pierre.

In January, the CPI grew 0.3% from the prior month and advanced 3.1% from a year earlier. Shelter prices were up 0.6% on the month, driving an increase in headline inflation.

"We know that rental inflation has slowed, but it takes a while to show up in CPI," Jean-Pierre said at a press conference on Tuesday morning. "Look at the trend. We see how the economy is moving. We don't focus on one month data, and so I think that's what's important here."

"But we're also going to continue to do the work to lower costs," she added.

-Darla Mercado, Rebecca Picciotto

January's hotter-than-expected inflation print sent stocks tumbling on Tuesday morning, but Globalt Investments' Thomas Martin believes that the selloff has been a "knee-jerk reaction" that ultimately won't change the market's direction.

"You're getting a little correction here," the portfolio manager told CNBC. "[The CPI print] is a little bit worrisome, but I don't think it changes the general direction that inflation is cooling."

He added: "I don't think this print shows that you're having a resurgence in inflation. I think it just shows that things don't move in a straight line."

— Lisa Kailai Han

More than 88% of the stocks on the New York Stock Exchange and roughly 75% of those on the Nasdaq Stock Market are declining in mid-afternoon trading Tuesday.

Measured by the number of shares traded, a scant 7.4% of total NYSE volume has traded higher, while 92% has fallen in price. (The balance is unchanged). Things are slightly better on the Nasdaq, where more than 22% of total volume has advanced in price Tuesday.

Selling wasn't torrential. Composite volume after 1:30 p.m. ET was 55% of the past 30 days' average on the NYSE and 65% on Nasdaq.

But, in a reflection of just how much momentum there has been in the stock rally that began in late October, new 52-week highs on the NYSE are still outnumbering new lows today, 79 to 40. Over on the Nasdaq, new highs trail new lows, 106 to 117.

— Scott Schnipper

Just one out of every 10 stocks in the Dow was able to buck the market downtrend and see gains in Tuesday's session.

Of the 30 stocks in the blue-chip average, just three were on track for gains. UnitedHealth Group added around 1%, while Visa and Disney added 0.8% and 0.4%, respectively.

As a whole, the index was down more than 400 points, amounting to a drop of about 1%. Walgreens and Goldman Sachs led the average lower, with the stocks down about 4% and 3%, respectively.

— Alex Harring

Cryptocurrencies and related stocks fell Tuesday amid the broader market sell-off following the hotter-than-expected January CPI reading.

Bitcoin was down 3% to $48,543.35, according to Coin Metrics. The day before, it punched through the $50,000 mark to its highest level in more than two years.

Companies whose performance is tied to the price of bitcoin were dragged with it. The crypto exchange Coinbase fell 5%, while bitcoin proxy Microstrategy lost 4%. Miners also pared big gains from the previous session, with CleanSpark and Iris Energy lower by about 2% each. Marathon Digital and Riot Platforms, the two largest mining stocks, retreated by 8% and 4%, respectively.

For more read the full story here.

— Tanaya Macheel

Check out the companies making headlines in midday trading.

WK Kellogg — The cereal company's shares surged 11%  after posting a beat on both top and bottom lines in the fourth quarter. The recently spun-off company also raised its 2024 forecast. 

Shopify — The e-commerce company saw shares slide more than 10% after it gave a mixed forecast for the current quarter. Shopify said it expects free cash flow margin to be in the high-single digits, below Wall Street's projected 13.6%. The company did beat fourth-quarter earnings and revenue estimates.

Arista Networks — The computer networking stock fell 4% despite topping fourth-quarter estimates. Arista Networks said it expected first-quarter revenue to range between $1.52 billion and $1.56 billion versus an estimate of $1.53 billion. Many on Wall Street, including Goldman Sachs, had expected the company to raise its full-year outlook.

The full list can be found here.

— Hakyung Kim

Housing stocks broadly fell Tuesday after January's consumer price index came in hotter than expected, driven by high shelter prices. The yield on the 10-year Treasury also jumped 11 basis points to 4.28% on the news, adding further pressure on the rate-sensitive sector.

Homebuilders such as Toll Brothers declined 4.7%. Shares of D.R Horton and Lennar slid more than 3%, each, followed by AvalonBay Communities down 1.8%.

— Hakyung Kim, Sarah Min

The SPDR S&P Software & Services ETF (XSW) fell 3.46% earlier on Tuesday, putting it on track for worst day since Mar. 10, 2023 when it lost nearly 3.8%.

This stat will hold true as long as the XSW ETF closes down 3.42%; otherwise, it will be the worst-performing day since Aug. 2, 2023.

Teradata and Blackbaud led the ETF's decline. The stocks are respectively down more than -23% and 13% so far today, followed by Marathon Digital and OneSpan with losses around 8% each.

— Hakyung Kim, Gina Francolla

Nvidia shares rose 1% earlier on Tuesday, bucking Monday's broader market downtrend and weakness among technology stocks as yields marched higher.

The chipmakers, slated to report earnings next week, has rallied nearly 47% year to date and is up 18% this month as Wall Street amps up its bets on artificial intelligence and growth.

— Samantha Subin

The 10-year Treasury yield spiked 10 basis points to 4.27%, hitting a new high for 2024 after a hotter-than-expected inflation report. The benchmark rate finished 2023 at 3.88%.

Yields and prices move in opposite directions, and one basis point equals 0.01%.

Bond yields have risen significantly since Federal Reserve Chair Jerome Powell tempered rate cut expectations. Tuesday's data added to doubts that the central bank would be able to lower borrowing cost as much as investors had anticipated.

— Yun Li

Technology stocks slumped on Tuesday after a hotter-than-expected inflation report pushed up yields, with the yield on the 10-year Treasury note last up 9 basis points to 4.261%.

Megacap technology stocks were among the biggest laggards, with Advanced Micro Devices, Nvidia, Microsoft, Amazon and Meta Platforms last down about 2% each. Apple and Alphabet slumped more than 1% each.

Semiconductor and software stocks also underperformed, with Salesforce and Oracle slumping more than 2% each. Arista Networks declined 5%, while Marvel Technology dropped 3%.

The tech-heavy Nasdaq Composite declined 1.5%.

— Samantha Subin

Small-cap stocks took a particularly harsh beating as the market struggled on Tuesday, pulling a closely followed index back into negative territory on the year.

The small cap-focused Russell 2000 dropped more than 3% in Tuesday's session. By comparison, the broad S&P 500 lost just around 1.3%.

With the loss, the Russell 2000 was down about 3% on the year. That marks a return to trading in the red after a recent rally briefly pulled the index into positive territory compared with the start of 2024.

Meanwhile, the S&P 500 is still up 4% year to date, further underscoring the rocky period for small-caps.

— Alex Harring

The CME FedWatch Tool shows that a May rate cut by the Federal Reserve is largely off the table, at least according to the latest 30-day fed funds futures pricing data following the release early Tuesday of January's stronger-than-forecast consumer price index numbers.

The probability of a May rate cut slumped to 36.6%, down from 52.2% on Monday, while the probability of the Federal Reserve holding rates steady has now risen to 60.8%, up from 39.3% yesterday, according to the CME calculator.

On the other hand, the probability of a rate cut in June now stands at 78.6%, down from 92.2% on Monday, while the chances of the Fed holding rates steady when summer officially begins are around 21.4% on Tuesday, against just 7.8% yesterday.

— Lisa Kailai Han, Scott Schnipper, Jeff Cox

Hotter-than-expected January inflation data sent stocks plunging on Tuesday morning.

The Dow Jones Industrial Average lost 331 points, or 0.9%. The S&P 500 fell 1.4%, while the Nasdaq Composite slid 2.1%.

— Lisa Kailai Han

Here are some of the stocks making the biggest moves premarket:

• JetBlue Airways — Shares of JetBlue Airways popped more than 15% after activist investor Carl Icahn revealed a 10% stake in the airline, viewing the company as undervalued.
• Arista Networks — The computer networking stock dropped more than 7% even after the company topped fourth-quarter estimates. Many on Wall Street, including Goldman Sachs, had expected the company to raise its full-year outlook.
• Tripadvisor — Shares jumped nearly 12% after Tripadvisor formed a special committee, comprised of its independent directors, to evaluate proposals that may be pitched for a "potential transaction."

Read the full list of stocks on the move here.

— Samantha Subin

Stock futures slid on Tuesday morning, following a stronger-than-expected read on the latest consumer price index, a key measure of inflation.

Consumer prices increased 0.3% in January, higher than the 0.2% rise expected by economists polled by Dow Jones. The annualized change of 3.1% was also higher than the estimated 2.9%.

— Lisa Kailai Han

The pressure is on for this week's economic data releases to deliver some good news, according to UBS.

A strong earnings season has propelled a market rally so far in 2024, with the Dow Jones Industrial Average cinching another record close on Monday afternoon. UBS' Mark Haefel believes the rally has so far been "well supported by healthy economic fundamentals and profit growth," but there's still no guarantee that it will last.

"Inflation data this week could help determine whether market confidence in the health of the US economy should mount further," he wrote. "We will be looking for further evidence of slowing US inflation and resilient economic growth before concluding markets should price in a 'Goldilocks' scenario rather than a soft landing."

Traders will also keep a close eye on January's retail sales data — set for release on Thursday morning — to track the strength of the U.S. consumer.

"The S&P 500 is now trading close to the 5,000 level where we would expect it to end the year in the event of a soft landing. To reach our upside outcome of 5,300 by the end of 2024, we would need to see further positive signs on inflation, Fed policy, and growth, including from data and earnings releases this week," Haefele added.

— Lisa Kailai Han

Hasbro tumbled more than 12% in premarket trading after the toymaker missed financial expectations for the fourth quarter.

The company behind My Little Pony and Dungeons & Dragons earned 38 cents per share, excluding items, on $1.29 billion in revenue. Those figures came in below the forecasts of analysts polled by LSEG, who anticipated 66 cents per share and $1.36 billion.

Hasbro also said to brace for a weak gross margin and drop in full-year revenue tied to consumer products.

Shares have underperformed in 2024, adding just about 0.5% since the new year began.

— Alex Harring

Coca-Cola shares were little changed after the beverage giant posted mixed results for the fourth quarter.

The company earned an adjusted 49 cents per share, matching an LSEG estimate. Revenue came in at $10.85 billion, beating a forecast of $10.68 billion. The stronger-than-expected sales were driven in part by higher prices.

— Fred Imbert

European markets were mostly lower on Tuesday morning, as investors assessed incoming corporate earnings reports and awaited a key U.S. inflation print.

The pan-European Stoxx 600 index slipped 0.3% in early trade, with tech stocks shedding 1.9% to lead losses while health care stocks added 0.4%.

Japan's benchmark Nikkei 225 crossed the 38,000 mark on Tuesday, marking the first time the index was at these levels since 1990.

The index surpassed 38,000 points just minutes before its close, but slipped slightly to end the day at 37,963.97 with a 2.89% gain.

The broad-based Topix also gained 2.12% to close at 2,612.03, also at a 34-year high.

— Lim Hui Jie

Index provider MSCI has raised India's weightage in its Global Standard index to 18.2% in its February review, a record high, according to Reuters.

The report added that India's weightage in the index has nearly doubled since November 2020.

MSCI said that it had added five Indian securities to the index in the February review. In total, MSCI will add 24 securities to the index and remove 101 securities.

Most notably, 66 China securities were taken off the index, with only five added. The changes will take effect on Feb. 29, after market close.

— Lim Hui Jie

Shares of Japanese investment holding company SoftBank jumped as much as 10.2% as Arm shares continued their rally into a second week.

The chip designer saw its shares soar 29% on Monday. It has gained 93% since it reported quarterly financials on Feb. 8. SoftBank holds about 90% of Arm's outstanding stock.

With the rise, SoftBank is the largest gainer on the Nikkei on Tuesday, with the index also gaining almost 2% and leading gains among Asian markets.

— Lim Hui Jie

Credit card spending may have declined in January, but this is normal behavior, according to Bank of America.

January spending activity dropped 0.8% year-over-year and 10.6% from December.

"While there have been headlines about January softness, we note that our data suggests spending historically declines by 14.6% m/m in January. As such, we view the data as better than expected," analyst Mihir Bhatia wrote.

— Lisa Kailai Han

The Russell 2000 index just wrapped up its third consecutive winning session.

The small-cap benchmark closed higher by 1.75% on Monday, its best day since Jan. 22. That follows gains of 1.53% on Friday and 1.5% Thursday. Over the past week, the Russell 2000 has surged more than 5%.

Even with the recent string of positive days, the Russell 2000 continues to lag the three major averages for the year. It's up 0.9% in 2024, while the S&P 500 has a 5.3% gain. Tech continues to dominate, with the Nasdaq Composite up more than 6% this year. The Dow Jones Industrial Average is up just shy of 3% in the period.

-Darla Mercado, Chris Hayes

Check out some of the companies making headlines in extended trading.

JetBlue Airways — The airline's stock jumped more than 15% after activist Carl Icahn reported a nearly 10% stake in the company. He said JetBlue shares are undervalued.

Avis Budget Group — Shares slipped about 1% after the rental car company's fourth-quarter revenue of $2.76 billion in the fourth quarter missed estimates. Analysts polled by LSEG, formerly known as Refinitiv, forecast $2.81 billion.

ZoomInfo Technologies – Shares of the market intelligence company soared nearly 23%. ZoomInfo posted adjusted earnings of 26 cents per share on revenue of $316 million in the fourth quarter. Analysts polled by LSEG called for earnings of 25 cents a share and revenue of $311 million.

Read the full list here.

— Brian Evans

Stock futures were lower on Monday as Wall Street turned its attention to the January consumer price index report.

Futures tied to the Dow Jones Industrial Average fell 24 points or 0.06%. S&P 500 futures pulled back 0.1%, while Nasdaq 100 futures ticked down 0.2%.

— Brian Evans