The S&P 500 ended down on Wednesday after a hotter-than-expected U.S. inflation reading added to worries that the Federal Reserve would not cut interest rates anytime soon, while CVS Health and Gilead Sciences rallied after upbeat quarterly reports.

January inflation ran hot, and the odds of Fed interest rate cuts fell as Consumer Price Index total CPI inflation accelerated to 3.0%, the highest rate since June 2024.

This week’s forthcoming Consumer Price Index report could show easing year-on-year inflation, increasing the potential for Fed interest rate cuts in May or June 2025.

Inflation picked up for a fourth straight month in January amid another rise in in food and energy costs, possibly setting the stage for a year of halting progress in the battle to slow consumer price increases as President Donald Trump rolls out myriad import tariffs.

Inflation picked up at a higher pace than expected in January, leaving the Federal Reserve playing a waiting game to see the impact of tariffs and other policies on price pressures.

Surprisingly strong U.S. inflation in January stoked investor fears that a heating economy and looming tariffs could corner the Federal Reserve, undercutting interest rate-cut hopes and even raising the threat of a hike.

Consumer prices rose 3%, extending a recent pattern of increases at the start of the year that likely derails the prospect for Federal Reserve rate cuts anytime soon.