By Yasin Ebrahim
Investing.com -- The Dow closed lower Tuesday, as investors digested the latest data showing signs of cooling, but stickier inflation that triggered a jump in Treasury yields on bets for a more aggressive Federal Reserve.
The consumer price index rose 0.5% last month, in line with expectations, but for the 12 months through January was 6.4%, above expectations of 6.2%. Core inflation , which strips out energy and food prices, slowed to an annualized pace of 5.6% in January, though that was smaller than the expected decrease of 5.5%.
“Inflation has peaked but isn't declining as quickly as the Fed would have liked,” Jefferies said in a note.
Markets are now expecting that “the FOMC will raise its terminal rate from 5.25% in December to 5.5% in March when the dots get updated, and possibly higher,” Scotiabank Economics said in a note.
The move higher in rates pegged back growth sectors of the market including big tech, but that was more than offset by strength in semiconductors, led by Nvidia.
NVIDIA (NASDAQ: NVDA ) closed more than 5% higher after Bank of America waxed lyrical about the chipmaker’s potential boost from a surge in demand for artificial intelligence programs.
Nvidia is in pole position to lead the “AI arms race,” Bank of America said and raised its price target on the chipmaker to $255 from $215 a share.
The company said it expected to remain in profit for 2023, confounding Wall Street expectations for a full year loss of 11 cents a share. But some remain cautious on the stock, citing “ambitious” guidance.
“Palantir established another seemingly overly ambitious target of 40% US Commercial growth in CY23. All in all, we walked away from the print incrementally cautious, and we're sticking with our underperform rating,” Deutsche Bank said in a note.
Consumer staples were one of the biggest drags on the market, weighed down by a more than 1% fall in Coca-Cola (NYSE: KO ) after the beverage giant reported in-line earnings, but revenue that topped estimates .
Coca-Cola’s bottom line was kept in check by “headwinds from the BODYARMOR acquisition and higher operating costs,” Goldman Sachs said, though pointed to “strong” guidance as a reason for optimism.
“Overall we think KO’s guidance is reflective of better than feared consumer elasticities despite the recent and significant price increases the industry has implemented,” it added.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.