Stock Market Update

Equity futures plunged and Treasury yields surged in response to the January Consumer Price Index report.

Total CPI increased 0.5% month-over-month in January (Briefing.com consensus 0.3%) following a 0.4% increase in December. Core CPI, which excludes food and energy, increased 0.4% month-over-month (Briefing.com consensus 0.3%) following a 0.2% increase in December.

On a year-over-year basis, total CPI was up 3.0%, versus 2.9% in December, while core CPI was up 3.3%, versus 3.2% in December.

The key takeaway from the report is that the inflation readings moved in the wrong direction for the Fed's policy comfort (and that's before any possible impact from tariff actions), which will keep the market on edge about the Fed perhaps not cutting rates at all this year or maybe even having to keep a rate hike on its policy deliberation table.

The S&P 500 futures are down 67 points and are trading 1.1% below fair value, the Nasdaq 100 futures are down 252 points and are trading 1.2% below fair value, and the Dow Jones Industrial Average futures are down 417 points and are trading 1.0% below fair value.

The 10-yr note yield, which is most sensitive to changes in inflation, moved from 4.53% ahead the 8:30 ET release to 4.64%. The 2-yr yield moved from 4.29% to 4.36%.