U.S. stocks ended mixed on Wednesday, as the unexpected rise in inflation led to speculation that the Federal Reserve may delay interest rate cuts to manage the economy's overheating.

The Dow Jones Industrial Average declined by 225.09 points, or 0.50 percent, ending at 44,368.56. The S&P 500 decreased by 16.53 points, or 0.27 percent, to close at 6,051.97. In contrast, the Nasdaq Composite Index edged up by 6.09 points, or 0.03 percent, finishing at 19,649.95.

Within the S&P 500's 11 primary sectors, nine closed in negative territory. Energy and real estate sectors led the declines, losing 2.69 percent and 0.91 percent, respectively. Conversely, consumer staples and communication services sectors posted gains, rising 0.23 percent and 0.04 percent, respectively.

The U.S. Bureau of Labor Statistics reported Wednesday that the consumer price index (CPI), a comprehensive measure of the costs of goods and services across the U.S. economy, accelerated by 0.5 percent on a seasonally adjusted basis for the month, pushing the annual inflation rate to 3 percent. This outcome surpassed the estimates, which had predicted a 0.3 percent monthly increase and a 2.9 percent annual rate, with the annual rate rising by 0.1 percentage point compared to December.

Excluding volatile food and energy prices, the CPI advanced by 0.4 percent for the month, resulting in a 12-month inflation rate of 3.3 percent -- again beating the respective forecasts of 0.3 percent and 3.1 percent -- and the annual core rate was up by 0.1 percentage point from December.

"Shelter costs continue to be the main driver of core inflation as higher mortgage rates push more Americans into a rental market in which vacancy rates are near record lows," said Erik Norland, chief economist at CME Group. "Traders appear to believe that today's data make additional Fed cuts less likely than they had expected previously."

"The 'wait and see' Fed is going to be waiting longer than anticipated after a red-hot January CPI inflation report," wrote Josh Jamner, investment strategy analyst at ClearBridge Investments. "This report puts the final nail in the coffin for the rate cut cycle, which we believe is over."

Market expectations have shifted, with traders now pricing the next rate cut to occur no earlier than September, even as Fed Chair Jerome Powell cautioned against reading too much into the latest CPI report. "We don't get excited about one or two good readings and we don't get excited about one or two bad readings," Powell said in testimony before the House Financial Services Committee.

Powell reiterated Wednesday that while the Fed has made "great progress" in bringing inflation closer to its 2 percent target, it is "not quite there yet." He emphasized the need to keep monetary policy restrictive for now.

Meanwhile, a new round of earnings has provided insight into the resilience of Corporate America. Kraft Heinz shares slipped after the company's 2025 profit outlook fell short of expectations, whereas CVS Health enjoyed a boost as its quarterly profit drop was smaller than anticipated.

In after-hours trading, Reddit's upcoming results are drawing significant attention amid lofty Wall Street expectations, and Robinhood's report is also in the spotlight following a three-year high in its stock price.

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