On Wednesday, the U.S. stock markets exhibited mixed results, reflecting the financial industry's cautious response to recent economic indicators. Notably, the Consumer Price Index (CPI) for January exceeded economists' forecasts, indicating increasing inflationary pressures. This development has inevitably led analysts to reconsider expectations about potential interest rate cuts by the Federal Reserve. The shifts in the financial landscape were palpable as the Dow Jones Industrial Average experienced a decline of 225.09 points, settling at 44,368.56. Meanwhile, the Nasdaq Composite saw a slight increase of 6.09 points to finish at 19,649.95, while the S&P 500 lost 16.53 points, closing at 6,051.97. Technology giants such as Amazon and Nvidia saw their stocks drop by over 1%, although Tesla enjoyed a surge, rising by 2.4%. Meanwhile, the Nasdaq Golden Dragon Index, which tracks Chinese companies listed in the U.S., gained 2.7%, thanks in part to Alibaba's nearly 5% climb, reaching its highest point since July 2022.
Turning to European markets, the trading scene reflected a more optimistic tone. The DAX 30 index in Germany surged by 108.39 points, or 0.49%, finishing at 22,142.52. The UK's FTSE 100 also posted gains, rising by 27.87 points, or 0.32%, to reach 8,805.26. The French CAC 40 climbed by 15.23 points, a modest 0.19% increase, and closed at 8,044.13. Other European indices mirrored this positive sentiment, with the Euro Stoxx 50 rising by 12.94 points and Spain's IBEX 35 jumping by 143.10 points, representing a robust 1.12% increase. In contrast, Italy's FTSE MIB experienced a small dip, falling by 44.05 points, or 0.12%, to 37,538.00.
In the Asia-Pacific region, the stock exchanges performed well, with Japan's Nikkei 225 climbing by 0.42%, and South Korea's KOSPI increasing by 0.37%. Indonesia's Jakarta Composite index demonstrated an impressive growth of 1.74%, showcasing the region's resilience in the face of global economic fluctuations.
The commodities market reflected some volatility, particularly in the gold sector. In New York, spot gold gained 0.20%, reaching 2,903.49 USD per ounce. However, shortly after the U.S. CPI data was released at 21:30 Beijing time, gold prices plunged to 2,864.21 USD, marking a new daily low before recovering. Meanwhile, COMEX gold futures saw a slight decline of 0.18%, closing at 2,927.30 USD, having spent most of the trading day in a downward trend. The fluctuations mirrored the broader market uncertainty as traders responded to the latest economic reports.
In crude oil, benchmarks underwent significant movements as well. Brent crude oil futures for April delivery fell by 1.09 USD or 1.42%, settling at 75.91 USD per barrel. Similarly, West Texas Intermediate crude for March fell by 1.14 USD, down 1.55% to 72.18 USD per barrel. These declines reflect ongoing concerns about global supply and demand dynamics amid geopolitical tensions and varying economic signals from major economies.
The U.S. dollar showed signs of volatility at the close of trading, with the ICE Dollar Index remaining approximately stable at 107.936 points. However, the release of the CPI data led to a notable spike, reaching a daily high of 108.523 points before retracting for the remainder of the trading session, ultimately ending lower at 107.627 points as the Federal Reserve's hearings proceeded.
In macroeconomic news, the January CPI unexpectedly rose to 3%, a significant increase that surprised many as economists had forecast a stable inflation rate of 2.9% as of December. The month-on-month rise of 0.5% also exceeded expectations, which traditionally hovered around 0.3%. This data triggered a wave of sell-offs in both government bonds and stock futures, further compounded by a sharp rise in the two-year U.S. Treasury yield, which surged to 4.37%.
Federal Reserve Chair Jerome Powell urged caution in interpreting the CPI data. He addressed the committee that oversees financial policies stating, "CPI readings have exceeded just about every prediction, but let's not get overly excited by one or two good or bad results." Powell emphasized the Federal Reserve's focus on the Personal Consumption Expenditures (PCE) index as a more reliable gauge of inflation, hinting that tomorrow's PCE data would provide necessary context for interpreting the CPI figures.
In budgetary concerns, the U.S. faced a staggering deficit of 840 billion USD in the first four months of the fiscal year 2025. This increase has been driven by escalating expenditures in healthcare, social security, and interest payments. The Treasury's report indicated that January alone witnessed a 129 billion USD increase in the deficit. Adjusted for calendar differences, the cumulative deficit from October to January surged by 25%. A senior Treasury official noted that these numbers may have been influenced by delayed tax payments arising from natural disasters in 2023, complicating the overall budget picture.
In the tech sector, OpenAI's CEO Sam Altman announced the forthcoming launch of the new GPT-4.5 model, internally dubbed "Orion". Expected to debut in a matter of weeks, Orion is yet to reach the performance benchmarks set by the company. Altman pointed out that GPT-4.5 would signify the end of an era, marking OpenAI's last model developed without additional computational resources intended to closely imitate human reasoning. This announcement signals a shift in the AI landscape as OpenAI explores new methods involving reasoning models in updates such as o1 and o3.
From a corporate standpoint, Cisco Systems projected optimistic revenue for the quarter, fueled by heightened enterprise spending on infrastructure to harness artificial intelligence capabilities. Following the release of its quarterly reports, Cisco predicted revenues between 13.9 billion and 14.1 billion USD, a figure that lies at the lower end of analysts' earlier expectations. Cisco's revenue outlook suggests promising investments from businesses looking to accelerate their AI integration process.
Intel's shares surged following a report from Baird speculating that the company could enter into a joint venture with TSMC to manage a chip manufacturing facility. The implications of this venture, which involves sending TSMC engineers to Intel's leading-edge manufacturing plants, could create transformative opportunities for both companies, although the initial specifics remain unconfirmed. Over the past three days, Intel's stock has accumulated a notable 16% rise.