Dow tumbles 500 points on hot inflation data

Stocks tumbled on Tuesday after fresh data revealed that inflation eased somewhat but stayed stubborn in January.

That comes after the Dow Jones Industrial Average on Monday notched a record high close, while the S&P 500 retreated somewhat from a record high.

The Dow slid 527 points, or 1.4%. The S&P 500 declined 1.4% and the Nasdaq Composite lost 1.7%.

The Consumer Price Index revealed that prices rose by 3.1% for the 12 months ended in January, according to Bureau of Labor Statistics data released Tuesday. On a monthly basis, CPI rose by 0.3% last month.

Both measures came in hotter than expected: Economists expected inflation to ease to 0.2% from December and slow to 2.9% annually, according to FactSet.

Traders now largely expect the Federal Reserve to first cut rates in June or July, according to the CME FedWatch Tool.

“With this new data, a first cut in June seems like the most reasonable expectation unless we see a very quick, severe drop in labor market activity or a geopolitical shock,” wrote Greg Wilensky, head of US fixed income at Janus Henderson Investors, in a note on Tuesday.

Atlanta Fed President Raphael Bostic told CNN in an exclusive interview published Monday that he doesn’t see the Fed cutting rates until the summer.

As stocks slid on Monday, bonds also sold off. The yield on the 10-year Treasury note rose to 4.26%.

Elsewhere, JetBlue shares popped 13.2% after Carl Icahn disclosed late Monday that he had taken a 9.9% stake in the company.

Hasbro shares declined 7.8% after missing Wall Street’s expectations for its latest quarter.

This story is developing and will be updated.