Wall Street falls sharply after US CPI and Coca-Cola results

Wall Street is experiencing a downturn after the release of January inflation data, which was higher than analysts expected. The Nasdaq Composite fell about 2%. Before the start of the session, Coca-Cola reported its results for 2023.

Thus, the Dow Jones index lost 1.39%, to 38,260.43 points; The S&P 500 fell 1.5% to 4,946.5 and the Nasdaq Composite lost 1.93% to 15,633.13.

The decline comes as the US consumer price index (CPI) came in at 3.1% year-on-year in January, suggesting a slowdown of three-tenths from the December figure.

This is how Wall Street opens

Eduardo Bolinches

For its part, the benchmark index, which excludes food and energy prices from its calculations due to their greater volatility, ended the first month of 2024 up 3.9%, unchanged from the previous month. This is the lowest level since September 2021.

The moderation in inflation reported on Tuesday was lower than expected by analysts, who expected headline inflation to be 2.9% and the policy rate to fall to 3.7%.

In recent weeks, the market has softened its forecasts for the Federal Reserve’s (Fed) rate cut planned for 2024. So investors expect the central bank to cut the price of money five times during the year – by a total of about 125 basis points – compared with the seven it estimated at the start of the year.

Although interest rates remained high longer than expected, hopes of an early easing of monetary policy sent prices higher on Wall Street’s major indexes.

The S&P 500 has finished higher in 14 of the last 15 weeks, something that hasn’t happened since March 1972. Likewise, the Dow Jones Industrial Average is trading at record levels, and on Monday the Nasdaq Composite reached, albeit briefly, all-time highs recorded at the end of November 2021.

Good business results and expectations for artificial intelligence have added to the future rate cuts. Using this technology, Nvidia overtook Amazon.com in market capitalization on Monday.

Beyond the CPI, Coca-Cola’s results were known before the day began on Wall Street. The global soft drinks giant’s corresponding net profit for 2023 reached $10.714 million, up 12.3% from the profit recorded a year earlier.

Coca-Cola was one of the few Dow Jones stocks to rise early in the trading day. More precisely, they advanced by 0.35%. Additionally, United Health shares rose 1.09% and Visa rose 0.2%.

In contrast, Walgreens Boots (-4.07%), Goldman Sachs (-3.76%) and Home Depot (-2.88%) fell the most.

Apart from the selection, Jetblue Airways’ share price rise of 14.2% stands out. The company rose after it was revealed that activist investor Carl Icahn owned a 9.91% stake. In his opinion, the airline’s shares are “undervalued.”

Arista Networks shares fell 6.2% after the cloud solutions provider adjusted gross profit for the current quarter below market expectations. The same happened with Cadence Design, whose shares fell 6.9%.