CPI Raises Fed Cut Wagers – US Market Wrap

Wall Street found some relief as relatively subdued inflation data fueled stronger bets on Federal Reserve rate cuts, pushing bond yields lower at the end of a volatile week. While most stocks advanced, weakness in megacap technology shares capped gains in the broader US equity benchmark.

Treasuries rose across maturities, with two-year yields falling toward their lowest levels since 2022. Money markets increased expectations that the Fed could cut rates more than twice this year. Nearly 370 stocks in the S&P 500 climbed, though the index was little changed and still logged its worst week since November. A gauge of megacaps fell 1.1%, while the Russell 2000 rose 1.2%. Bitcoin advanced.

The consumer price index increased 0.2% in January, the smallest monthly gain since July, helped by lower energy costs. While services prices rose, core goods prices were steady. On an annual basis, core CPI posted its slowest increase since 2021, and the overall measure also cooled.

The Fed kept interest rates unchanged in January, citing signs of stabilization in the labor market and inflation that remains elevated. Earlier data showed US payrolls rose by the most in more than a year and the unemployment rate unexpectedly declined, signaling continued resilience at the start of 2026.

The yield on two-year Treasuries dropped five basis points to 3.41%. The S&P 500’s equal-weighted version gained 1%. US markets will be closed Monday for Presidents’ Day.

Gold climbed back above $5,000. Aluminum and other metals fell after reports that the US may narrow the scope of import tariffs on some aluminum and steel products.