The S&P 500 plunged and interest rates jumped on Wednesday after consumer prices rose more than expected in January, raising concerns that inflation could return.

The broad market index slipped 0.27% to end at 6,051.97, and the Dow Jones Industrial Average dropped 225.09 points, or 0.5%, to 44,368.56. The Nasdaq Composite gained a modest 0.03% to close at 19,649.95.

"The higher-than-expected CPI confirms investor concerns about inflation being too high that will keep the Fed on the sidelines," said Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute. "While the risk market could go higher, the trajectory will be more choppy than the past two years."

The selloff came during the trading day after the consumer price index rose 0.5% for the month in January, bringing the annual inflation rate to 3%. Both were higher than the 0.3% and 2.9% gains expected by economists surveyed by Dow Jones. Excluding volatile food and energy prices, the core CPI rose 0.4% for the month and 3.3% over the past 12 months, both higher than expected.

The 10-year Treasury yield, a benchmark for mortgages, auto loans and credit cards, jumped to a session high of 4.66%. Shares of several large-cap technology stocks, including Amazon and Alphabet, fell. Consumer stocks and bank stocks that are at risk from slowing spending and a weaker economy also fell.

Helping sentiment were comments from House Speaker Mike Johnson who said, according to Reuters, that the White House is considering reciprocal tariff exemptions on products such as pharmaceuticals and cars. GM and Ford shares closed in positive territory, along with Eli Lilly. Gains from Tesla, Apple and Palantir also helped cushion losses. CVS Health shares jumped nearly 15% on stellar fourth-quarter earnings. The latest inflation data made it unlikely the Fed will resume its rate-cutting campaign anytime soon and now raises concerns that the next move could even be a rate hike. Federal Reserve Chairman Jerome Powell testified before the House Financial Services Committee on Wednesday and said the latest CPI data was a reminder that the Fed has made "great progress" in bringing inflation closer to its 2% target but is "not there yet." "We want to keep policy tight for now," he told lawmakers in his second appearance on Capitol Hill this week. Powell's comments followed his testimony Tuesday before the Senate Banking Committee, where he said the Fed was in no rush to cut rates further. President Donald Trump said Wednesday morning before the CPI data was released that interest rates should be lowered. (Newsmaker23)

Source: CNBC