US Stocks Flat After Weaker CPI Data – Nasdaq 0.2% Lower
US equity markets closed broadly unchanged on Friday following the release of slightly softer-than-expected CPI data. The Dow Jones edged 0.10% higher to 49,500, while the S&P 500 gained 0.05% to finish at 6,836. The Nasdaq underperformed marginally, declining 0.22% to close at 22,546. In fixed income markets, Treasury yields moved lower: the US 2-year yield fell 4.8 basis points to 3.408%, while the 10-year yield declined 5.0 basis points to 4.048%. The US Dollar Index was little changed on the session, slipping 0.04% to 96.88 and remaining within recent trading ranges against the major currencies. Oil markets were comparatively subdued: Brent rose 0.34% to US$67.75 per barrel, while WTI crude added 0.08% to US$62.89. In contrast, precious metals saw stronger momentum, with gold rallying 2.43% to US$5,042.04, retesting weekly highs as lower yields provided support.
Fed Still to Cut Rates Mid-2026 After Data
It was a big week for US data last week and, therefore, for Federal Reserve rate expectations. After two key data releases, the market is still looking at mid-year for the first rate cut. The delayed employment data came in much stronger than expected on Wednesday, but downward revisions to previous data kept rate expectations in check. Friday’s CPI numbers, although the year-on-year data was lower, were also not significantly off expectations to move the dial. Currently, the market is estimating around a 50% chance of a cut in June, while July looks favourite for the first 25-basis-point move. We did not see much of a reaction in equity and FX markets; however, US yields moved lower on Friday, adding to recent losses to trade at multi-month lows. Traders will continue to assess US data in the coming days and will be looking to see if bond markets are ahead of the other markets or if they may have a pullback. Key to all of the above will be the Fed’s favoured inflation indicator, the Core PCE Price Index number, due out this Friday.
Quiet Calendar Day to Start the Trading Week
Looking ahead, trading conditions are expected to be relatively quiet today to begin the week. Chinese and several other Southeast Asian markets are closed for the Lunar New Year holiday, not reopening until Feb 24, while both US and Canadian markets will observe bank holidays today during the New York session. There is little on the macroeconomic event calendar across all three trading sessions today, so traders are expecting, or hoping, for a rare quiet day in 2026 to digest the plethora of updates that have hit the market in the last few weeks. As always, though, they will remain vigilant and maintain a close eye on newswires for any fresh geopolitical updates that could move markets hard in today’s thinner conditions.
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