NEW YORK, Feb 14 ― Global stock market indexes dropped, the 10-year US Treasury yield hit a 2-1/2-month high and the dollar touched a three-month peak against the yen on Tuesday after data showed US inflation slowed less than expected in January.

The US consumer price index report pushed back market expectations that any interest rate cuts by the Federal Reserve were imminent.

All three major US stock indexes fell more than 1 per cent each, and the Dow Jones industrial average posted its biggest daily percentage drop in almost 11 months.

The consumer price index increased 0.3 per cent last month after gaining 0.2 per cent in December, the Labour Department's Bureau of Labour Statistics said yesterday.

Economists polled by Reuters had forecast the CPI gaining 0.2 per cent on the month and rising 2.9 per cent year-on-year.

"Markets are taking it pretty hard because it puts a nail in the coffin of early (March) Fed rate cuts,” said Carol Schleif, chief investment officer at BMO Family Office in Minneapolis, Minnesota. "It's evidence of a still-sturdy economy. There's still inflation to be wrung out of the system.”

After the data, expectations rose that the Fed will likely not cut rates until its June 11-12 policy meeting, with CME Group's FedWatch Tool showing a 74.4 per cent chance for a cut of at least 25 basis points at that meeting. Expectations for a cut at the April 30-May 1 meeting declined to 36.1 per cent from 60.7 per cent on Monday.

The yield on the benchmark US 10-year Treasury note rose 14 basis points to 4.31 per cent after reaching 4.314 per cent, its highest level since December 1.

The Dow Jones Industrial Average fell 524.63 points, or 1.35 per cent, to 38,272.75, the S&P 500 lost 68.67 points, or 1.37 per cent, to 4,953.17 and the Nasdaq Composite lost 286.95 points, or 1.80 per cent, to 15,655.60.

U.S. stocks have been trading at record highs, boosted by the big technology companies and expectations the Fed will soon cut rates.

The MSCI world equity index, which tracks shares in 49 nations, lost 1.1 per cent. The Europe-wide Stoxx 600 index fell 0.95 per cent.

The greenback topped ¥150 for the first time since November following the data.

The dollar surged to ¥150.88, a three-month peak. It was last up 0.9 per cent at ¥150.75.

The dollar index also touched a three-month high. It was last up 0.68 per cent at 104.86, while the euro was down 0.58 per cent at 1.0709.

In cryptocurrencies, bitcoin touched its highest since December 2021 at US$50,383 (RM240,131), but was last down 0.58 per cent at US$49,545.00.

Also due this week are US retail sales data and a US producer prices report.

Oil prices rose as tensions continued in the Middle East and eastern Europe.

Brent LCOc1 futures settled 77 cents higher at US$82.77 a barrel, while US West Texas Intermediate (WTI) crude CLc1 gained 95 cents to settle at US$77.87.

Gold prices fell below the key US$2,000 per ounce level to a two-month low following the CPI data. Spot gold was down 1.3 per cent at US$1,993.29 an ounce, its lowest since December 13. ― Reuters