US CPI: Inflation Slides Under Consensus to 2.8%. Here’s Why Stocks Extended Declines

American consumer isn’t too happy to see egg prices rose 10% in February. Tariffs may make matters worse.

🎯 Inflation Ticks to 2.8%

• US inflation tracked by the consumer price index USCPI undershot expectations for February. The benchmark, released Wednesday morning, showed 2.8% annual growth, sliding below consensus views of 2.9% and also below the 3.0% pace in January.
• Core CPI year over year advanced 3.1% against 3.2% expected. Prices climbed on a monthly basis, too. The headline number landed at 0.2% against 0.3% anticipated by analysts. The core reading also reached 0.2% against 0.3% eyeballed by Wall Street.

👀 Stocks Drop

• The numbers initially sparked a relief rally in stocks after a brutal stretch of painful declines. But these gains were mostly hot air — all three market benchmarks gave up their knee-jerk increases about a couple of hours into the cash session on Wednesday. The Dow Jones Industrial Average DJI dropped as much as 1%.
• Prices of eggs, a hot commodity now, surged 10% in February mainly due to outbreaks of the Avian flu. Even though inflation is falling on average, it’s still rising, just at a slower pace. But that’s not as big an issue as Donald Trump’s looming tariff hikes.

🚨 Broad Nervousness

• Uncertainty over the White House’s tariffs policies is casting a shadow over mildly brewing price pressures. And this is a huge alarm bell for the Federal Reserve, which is likely to hit the pause on any further interest rate cuts until the storm clears and the outlook brightens.
• Hence, the drop in stocks can be explained with investors getting antsy and reluctant to jam their cash into risk assets.