Closing Bell: Inflation Moves Closer to Fed Target as Market Volatility Lingers

Key Points

• The S&P 500 finished flat, the Nasdaq-100 gained 0.18%, and the Russell 2000 outperformed with a 1.18% advance.
• Headline CPI rose 0.2% month-over-month versus the 0.3% estimate, while year-over-year inflation slowed to 2.4% from 2.7%.
• Arista Networks topped earnings expectations and issued strong Q1 revenue guidance of roughly $2.6 billion, highlighting continued AI-driven demand from hyperscalers.

Markets ended the day mixed after the CPI report came in below analyst expectations. The S&P 500 (SPX) finished flat, the Nasdaq-100 (NDX) advanced 0.18%, and the Russell 2000 (RUT) outperformed, gaining 1.18% on the session. Utilities, Real Estate, and Materials were the top-performing sectors, while Communication Services, Information Technology, and Consumer Discretionary lagged.

January CPI Shows Inflation Decelerating

The latest Consumer Price Index (CPI) report provided some encouraging signs across several segments, easing near-term inflation concerns during what is typically one of the more volatile months for the dataset. Headline CPI increased 0.2% month-over-month (m/m), coming in below consensus estimates of a 0.3% rise. On a year-over-year basis, headline CPI declined to 2.4%, down from 2.7% in the prior month and below market expectations of 2.5%.

Arista Networks Surges on AI-Driven Strength

Arista Networks (ANET) delivered a strong AI-driven quarter, with shares closing higher after the company reported better-than-expected fourth-quarter results and issued an upbeat outlook for 2026. Adjusted net income reached $1.05 billion, topping expectations, while first-quarter revenue guidance of approximately $2.6 billion came in well above Street estimates. The company also projected robust non-GAAP gross margins in the 62–63% range.

Management emphasized AI infrastructure as the core growth driver, benefiting from sustained hyperscaler spending by customers such as Microsoft and Meta, as data center and cloud capital expenditures continue to expand.

Market Events on Monday

• Presidents’ Day (Market Holiday)

Notable Earnings on Monday

• A.M: N/A
• P.M: N/A

This material is intended for informational purposes only and should not be considered a personalized recommendation or investment advice. Investors should review investment strategies for their own particular situations before making any decisions.

Schwab Network is brought to you by Charles Schwab Media Productions Company (“CSMPC”). CSMPC is a subsidiary of The Charles Schwab Corporation and is not a financial advisor, registered investment advisor, broker-dealer, or futures commission merchant.

Charles Schwab Media Productions Company and all third parties mentioned are separate and unaffiliated, and are not responsible for one another's policies, services or opinions.

Data contained herein is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. All events and times listed are subject to change without notice.