Wall Street Rattled by Stubborn Inflation; Fed Pivot Hopes Diminish

"The US equity market underwent a significant correction following the release of the January Consumer Price Index (CPI), which came in higher than market forecasts. This 'inflation shock' has forced traders to reconsider the Federal Reserve's path for 2026, with the probability of a March rate cut plummeting. High-growth tech stocks, particularly those in the AI sector, saw the sharpest declines as the 10-year Treasury yield climbed toward 4.5%. While major Wall Street banks remain optimistic about long-term corporate earnings, the immediate focus is on whether consumer spending can remain resilient in a high-rate environment. We expect heightened volatility through the end of the week as investors await retail sales figures."