Markets experienced mixed performance amid fresh inflation data showing stubbornly rising food prices and the ongoing debate over Federal Reserve interest rate policies. The news of a Justice Department criminal probe into Fed Chair Jerome Powell, though rare, did not immediately disrupt markets but added to uncertainty.
Following monthly CPI data pointing to a 0.7 percent jump in food prices in December, investors are weighing the likelihood and timing of further rate cuts. Futures markets currently price in two quarter-point interest rate reductions this year, with the first expected in April.
Rate-sensitive sectors, especially in tech and consumer discretionary, responded cautiously, while bond yields remained relatively stable. Traders are splitting between concerns over stubborn inflation and hopes that stimulus via lower rates could support economic growth.
Going forward, market participants will closely monitor upcoming inflation prints and Fed communications for clearer signals about the policy trajectory in a politically charged environment.
