Market Wrap: Mixed Close as Inflation Concerns Weigh on Sentiment

The stock market delivered a mixed performance following the latest inflation data, which showed price pressures remaining stubbornly elevated. While the headline Consumer Price Index (CPI) report exceeded expectations, prompting a sharp rise in Treasury yields, equities saw a divergence in performance across sectors. Investors grappled with shifting interest rate expectations and sector-specific earnings reports, resulting in a volatile session with a downward bias for most sectors.

The CPI report revealed that inflation has not cooled as much as the Federal Reserve and market participants had hoped. Year-over-year, total CPI rose to 3.0 percent from 2.9 percent in December, while core CPI, which strips out food and energy costs, increased to 3.3 percent from 3.2 percent.

These figures exceeded expectations and led to a repricing of rate cut expectations, pushing yields on the 10-year Treasury to 4.64 percent and the 2-year Treasury to 4.37 percent. The move in rates reflects investor concern that the Fed may need to delay or reduce the number of expected rate cuts this year.

Despite these macroeconomic pressures, the Nasdaq Composite managed to close in positive territory, gaining slight traction as investors bought into the dip in mega-cap technology stocks. Apple and Meta Platforms played a key role in the turnaround, each reversing early losses to finish in the green.

The resilience in select large-cap growth stocks highlights the ongoing appeal of companies with strong earnings power and defensible business models, particularly in uncertain economic environments.

However, most sectors struggled. The S&P 500 and Dow Jones Industrial Average closed in negative territory, with nine of the eleven S&P 500 sectors declining. The hardest-hit areas included energy and real estate, which are particularly sensitive to interest rates.

Energy stocks suffered as crude oil prices fell by nearly 3 percent, dragging the sector down 2.7 percent for the session. The rate-sensitive real estate sector declined by 0.9 percent, reflecting concerns about higher borrowing costs amid climbing Treasury yields.

There were pockets of strength in the market, particularly among companies that reported strong earnings. DoorDash, Gilead Sciences, and Confluent saw significant gains after delivering upbeat results. Confluent surged by more than 25 percent to a 52-week high, while Gilead Sciences posted a strong 7.5 percent rally. DoorDash also saw a solid 4 percent increase as investors responded positively to its performance.

Market performance year-to-date shows a clear divergence in investor sentiment. While the Dow Jones is up 4.3 percent in 2025, the S&P Midcap 400 and Russell 2000 have lagged with more muted gains of 1.6 percent and 1.2 percent, respectively.

The S&P 500 has climbed 2.9 percent, while the Nasdaq Composite is up 1.8 percent, showing that large-cap technology stocks continue to exert significant influence over market direction.

Looking ahead, investors will turn their attention to Thursday’s economic reports, which include the Producer Price Index (PPI) and weekly jobless claims. The PPI data will be particularly important as it provides insights into inflation trends at the wholesale level. Any surprises in PPI could further shift expectations for Federal Reserve policy and impact interest rate-sensitive sectors.

Global markets had a relatively stable session, with European indices closing higher and Asian markets showing gains across the board. The Hang Seng Index posted the largest increase, rising by 2.6 percent, while the Shanghai Composite and Nikkei both advanced.

Commodity markets reflected the broader economic uncertainty, with crude oil falling to $71.37 per barrel and gold slipping below $2,930 per ounce. Meanwhile, silver and copper gained modestly, reflecting mixed demand signals in the industrial metals market.

Overall, today’s session highlighted the market’s ongoing struggle with inflationary pressures and shifting interest rate expectations. While technology stocks provided some support, the broader market sentiment remained cautious. Investors will be watching the upcoming economic data releases closely for further clues on the Federal Reserve’s path forward.