U.S. Stocks Remain Sharply Lower After Early Sell-Off

Stocks moved sharply lower early in the session on Tuesday and continue to see significant weakness in afternoon trading. The major averages are all posting steep losses on the day after ending the previous session narrowly mixed.

While the Nasdaq and the S&P 500 are off their worst levels of the day, the Dow has fallen to new lows for the session in recent trading. The Dow is down 542.03 points or 1.4 percent at 38,255.35, the Nasdaq is down 257.40 points or 1.6 percent at 15,685.14.

The early sell-off on Wall Street came following the release of a highly anticipated Labor Department report showing consumer prices in the U.S. increased by slightly more than expected in the month of January.

The Labor Department said its consumer price index rose by 0.3 percent in January after inching up by 0.2 percent in December. Economists had expected consumer prices to edge up by 0.2 percent.

While the report also showed the annual rate of consumer price growth slowed to 3.1 percent in January from 3.4 percent in December, economists had expected the pace of growth to slow to 2.9 percent.

Excluding food and energy prices, core consumer prices climbed by 0.4 percent in January after rising by 0.3 percent in December. Core prices were expected to increase by 0.3 percent.

The annual rate of core consumer price in January came in unchanged from the previous month at 3.9 percent. The pace of core price growth was expected to decelerate to 3.7 percent.

With Federal Reserve officials repeatedly saying they need more “confidence” inflation is slowing before lowering interest rates, the data has further reduced optimism about a near-term rate cut.

CME Group’s FedWatch Tool is currently indicating just an 8.5 percent chance of a quarter point rate cut in March, while the chances of a quarter point rate cut in early May have fallen to 35.3 percent.

Quincy Krosby, Chief Global Strategist for LPL Financial, called the report a “disappointment for those who expected inflation to edge lower…