On February 12, 2025, the S&P 500 declined over 1% to the 6,005-point zone due to CPI data that exceeded predictions, reducing expectations for Federal Reserve interest rate cuts. Year-over-year CPI rose to 3.0% and core CPI to 3.3%, indicating persistent inflation concerns. These pressures have altered market sentiments, leading to volatility as investors reacted with sell-offs. Jerome Powell emphasized that despite inflation nearing the 2% target, significant changes in monetary policy are not warranted yet, hinting at delays in rate cuts until sufficient economic data is available.
The persistence of higher-than-expected inflation makes monetary easing in the short term more difficult, pushing the S&P 500 to last week's lows after CPI data release.
Federal Reserve Chairman Jerome Powell reiterated that while inflation is approaching the 2% target, it has not yet reached a level that justifies rate cuts.
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