Icahn Sends JetBlue Flying. Wall St Sells Off.

Equities

On Tuesday, the main indices on Wall Street slumped after a run of good form, with the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite falling by 1.37%, 1.36%, and 1.79% respectively. This downturn followed a report revealing that US consumer inflation in January exceeded expectations, causing a re-evaluation of the likelihood of near-term interest rate cuts.

The Dow Jones experienced its biggest one-day percentage drop in nearly eleven months, primarily due to an unexpected surge in shelter costs.

In the United Kingdom, the FTSE 100 and FTSE 250 indices also suffered losses, dropping 0.8% and 1.5% respectively. This movement was largely influenced by the US inflation data and domestic wage growth figures, which were stronger than anticipated at the end of 2023.

JetBlue Airways saw its shares soar by 21.6% after activist investor Carl Icahn disclosed a nearly 10% stake, citing the airline's stock as "undervalued." Conversely, Arista Networks experienced a 5.5% decline in share price following its forecast of a lower-than-expected adjusted gross margin for the current quarter. Marriott International also saw its shares dip after projecting an annual profit that fell short of analysts' expectations.

GSK's shares edged up by 0.9% following an upgrade by Citigroup, buoyed by positive study results for its multiple myeloma drug, Blenrep. AstraZeneca also saw a 1% increase in its stock price, offering some support to the market after four consecutive sessions of losses.

Forex & Commodities

The US dollar hit a three-month high, spurred by January's inflation figures which surpassed expectations, thus bolstering the anticipation that the Federal Reserve will maintain interest rates in March.

This surge saw the dollar breach the 150 yen mark for the first time since

November. Consumer Price Index (CPI) data indicated a monthly rise of 0.3% in January, above the forecasted 0.2%, with a year-on-year increase of 3.1% against the predicted 2.9%. The core CPI, excluding volatile food and energy components, ascended by 0.4%, maintaining the year-on-year advance of 3.9% seen in December.

The Fed's anticipated rate cuts have now been deferred to June, with futures indicating a roughly 80% likelihood of this eventuality.

The euro experienced a downturn, dropping 0.6% to $1.0707, touching its lowest point since mid-November.

Meanwhile, Bitcoin reached its highest level since December 2021 at $50,383, although it later receded below $50,000 post-CPI announcement.

Gold prices fell below $2,000 per ounce to a two-month low, as the inflation data dampened early expectations for a Fed rate cut, with spot gold settling 1.3% lower at $1,993.29 an ounce. The CPI outcome also spurred a rise in the US 10-year Treasury yield.