New York Stocks Fall Despite 'Lower-than-Expected' December Core CPI... Financials Drop on Card Interest Rate Cap

Core CPI Rises 2.6% Year-on-Year in December
Rate Freeze in January Likely Despite Hopes for Easing Inflation
Financial Stocks Decline as 10% Cap on Credit Card Interest Rates Proposed

All three major indices on the New York Stock Exchange declined on January 13 (local time). Although last month's inflation data came in below market expectations, it was not enough to change the outlook for a rate freeze this month. Additionally, weakness in financial stocks, including JPMorgan, contributed to the decline in the indices.

Traders are working on the floor of the New York Stock Exchange (NYSE) in the United States. Photo by Reuters Yonhap News

As of 11:34 a.m. on the same day at the New York Stock Exchange, the blue-chip Dow Jones Industrial Average was down 296.83 points (0.6%) from the previous trading day, standing at 49,293.37. The large-cap S&P 500 index was down 11.06 points (0.16%) at 6,966.21, while the tech-heavy Nasdaq index was down 2.443 points (0.01%) at 23,731.462.

The market focused on the Consumer Price Index (CPI) released that morning. According to the U.S. Department of Labor, the CPI for December 2025 rose 2.7% year-on-year, matching both expert forecasts and the previous month’s increase. The core CPI, which excludes the volatile energy and food sectors, also rose 2.6% year-on-year, maintaining the previous month’s level and coming in slightly below market expectations of 2.7%. As a result, concerns about a reacceleration of inflation eased somewhat.

However, despite these inflation indicators, expectations for a rate freeze in January remained unchanged. This is because the Federal Reserve faces a difficult policy decision in prioritizing between price stability and a slowing labor market.

Seema Shah, Chief Global Strategist at Principal Asset Management, said, "The lower-than-expected core CPI released today will not significantly change the Federal Reserve’s decision at the January meeting," adding, "The unemployment rate remains low, growth is above trend, and fiscal stimulus continues to support the economy." She further explained, "With inflation still above target, the Fed may keep the benchmark interest rate unchanged at this and several upcoming meetings."

Additionally, a policy being pushed by U.S. President Donald Trump to cap credit card interest rates is also dampening investor sentiment. On this day, as JPMorgan released its earnings, Jeremy Barnum, Chief Financial Officer of JPMorgan, suggested the possibility of legal action regarding the interest rate cap. Following his remarks, investor sentiment toward financial stocks deteriorated further.

The market is also closely watching the earnings announcements of major financial institutions. This week, Bank of America, Wells Fargo, Citigroup, Goldman Sachs, and Morgan Stanley are scheduled to release their results.

Furthermore, the U.S. Department of Justice has launched an investigation into Federal Reserve Chair Jerome Powell over alleged excessive spending on Fed building construction. The direction of this investigation, along with the controversy over the potential infringement of central bank independence, has also emerged as a variable influencing the stock market.

U.S. Treasury yields were slightly weaker, especially on short-term bonds. The yield on the 10-year U.S. Treasury, the global benchmark for bond yields, remained at 4.18%, the same as the previous day, while the yield on the 2-year Treasury, which is sensitive to monetary policy, fell by 2 basis points (1bp = 0.01 percentage point) to 3.52%.

By sector, financial stocks were broadly weak. JPMorgan was down 3.17%. Goldman Sachs and Mastercard fell by 0.82% and 4.33%, respectively. Alphabet, the parent company of Google, which rose around 1% the previous day and surpassed a market capitalization of $4 trillion for the fourth time in history, was up 1.98% on the day.