The U.S. stock market ended mixed on Tuesday after the publication of January's consumer price index data.
The S&P 500 concluded the trading session at 4,136.13, losing 1.16 points or 0.03. Dow Jones declined by 156.66 points or 0.46 percent to 34,089.27. NASDAQ, the only gainer among major Wall Street indexes, increased by 68.36 points or 0.57 percent to 11,960.15.
Since January 1, the S&P 500 has gained eight percent while NASDAQ is up around 14 percent. However, the rally faltered last week following signs of a robust labor market.
Seven of 11 sectors in the S&P 500 declined on Tuesday, with the biggest weight being real estate at a 1.08 percent loss, followed by consumer staples at a 0.95 percent decrease.
Shares of aircraft company Boeing rose by 1.3 percent to 218.45, its highest level in more than a year, after reports that Air India will purchase 220 units of passenger planes.
Hotel operator Marriott International strengthened by around four percent to 181.27 after it forecasted stronger Q1 earnings than anticipated due to high travel demand.
Palantir Technologies, a data analytics company, saw a 21 percent increase in its shares to 9.22 after projecting its first profitable year.
On the other hand, Coca-Cola shares went down by 1.7 percent despite forecasting a strong profit for 2023.
More than half of companies within the S&P 500 index have reported their earnings, with nearly 69 percent beating profit projections as of Friday. However, analysts predict that earnings in the last quarter of 2023 will fall by 2.8 percent from the previous year.
The mixed results on Wall Street followed the consumer price data published on the same day, which showed higher-than-anticipated month-over-month headline inflation of 0.5 percent. The annual inflation rate in January was 6.4 percent, against the initial estimate of 6.2 percent.
Experts said higher property rents contributed to elevated inflation last month, which will push the Federal Reserve to maintain its tight monetary policy.
"Inflation remains elevated, albeit it appears to be slowing," U.S. Bank Wealth Management chief equity strategist Terry Sandven said. "Looking at today's price action, I think it might be a little bit of profit-taking on the heels of strong year-to-date performance."
Cautious remarks by Fed officials
Analysts said cautious remarks by Fed officials after the CPI data publication also accounted for stock market results on Tuesday. Richmond Fed President Thomas Barkin said the central bank must prioritize lowering inflation to the target rate of two percent over risks to economic growth.
"If inflation settles, maybe we don't go quite as far but if inflation persists at levels far above our target then maybe we'll have to do more," Barkin added.
Dallas Fed President Lorie Logan also made similarly cautious remarks Tuesday, warning people that the central bank might continue its rate hikes longer than anticipated.
She said recent inflation data made it "hard to have confidence in any outlook." Logan also voiced her concerns about higher commodity inflation that could come with the relaxation of the pandemic policy in China.
The market currently forecasts at least two more rate hikes by the central bank, each by 25 basis points. The federal funds rate is also expected to peak by July at 5.28 percent.
Investors are now waiting for January retail sales data due today to obtain insights on consumer spending amid recession fears. Analysts estimate a jump in retail sales rate, which they say will influence the Fed's decision in the upcoming rate-setting meeting.