stock market holds steady despite january inflation increase. – Charm

Wall Street remained resilient as investors focused on optimism surrounding Ukraine peace talks.
President Donald Trump’s tariff plan also appeared less severe than anticipated.

Inflation and its impact on the U.S. economy crept back into the conversation over the week but Wall Street remained resilient as investors focused on optimism surrounding Ukraine peace talks and a tariff plan from President Donald Trump that appeared less severe than initially feared — at least for now.

In January, the unadjusted consumer price index rose 3% year over year, exceeding expectations of 2.9%. On a monthly basis, inflation climbed 0.5%, significantly outpacing forecasts of 0.3% and marking the biggest jump since August 2023.

Energy prices were the main culprit, with fuel oil surging 6.2%, while egg prices skyrocketed 15%, hitting fresh record highs. Yet inflationary pressures were also evident among services.

Core inflation, which excludes volatile food and energy prices, edged up to 3.3% year over year, instead of an expected decline to 3.1%. Additionally, inflation hit 3.5% at the producer level, also a surprise .

Federal Reserve Chair Jerome Powell, during his semiannual testimony before Congress, reiterated there is “no rush” to cut interest rates.

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In response, investors readjusted their expectations of when the Fed might cut interest rates next. Some economists even speculated that a rate hike may be necessary to curb the inflationary wave.

More:The word of the week was ‘caution’ in markets as investors reassess growth expectations

Despite hotter-than-expected inflation, the market’s attitude on taking on risk did not change significantly as Trump reportedly talked with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy about peace in Ukraine. This news helped keep oil prices stable for the week.

On Thursday, Trump announced a plan to impose “reciprocal tariffs” on all countries, meaning the U.S. would match other nations’ tariff rates. Yet a study period lasting until April 1 suggests there is room for negotiations before implementation. The U.S. dollar weakened amid the less-aggressive tariff stance.

The standout performer of the week was Intel, which posted its strongest weekly rally since 1975. The surge was driven by a government push to expand domestic semiconductor manufacturing.

Additionally, reports emerged that Intel may join Taiwan Semiconductor Manufacturing Co. in a joint venture, further fueling investor optimism.

Tesla sales down

Tesla’s global market share declined in January with European sales dropping 51% year over year and China’s sales declining by 15% year over year. Reuters reported global sales of fully electric vehicles and plug-in hybrids (PHEV) rose 17.7% year on year to 1.3 million in January, the third consecutive month of slowing growth. Reuters based its report on data from Rho Motion, which tracks battery demand.

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