us stocks are trading modestly lower after januarys consumer price index data revealed a seventh straight month of slowing inflation even as the data was slightly higher than consensus the slow decline in inflation has investors wondering how much higher the federal reserve will go with interest rates on monday the dow jones industrial average rose 377 points or 111 to 34246 the sp 500 increased 47 points or 114 to 4137 and the nasdaq composite gained 174 points or 148 to 11892 the nasdaq composite is up 136 so far in 2023 but remains 259 off its record high touched in november 2021 the january consumer price index showed the cost of living rising 05 month over month and falling to a 64 yearly rate down from 65 in december the core cpi taking away volatile food and energy prices fell to 56 from 57 for the year see cpi shows us inflation still sticky the good news is the inflation rate decline the bad news is the decrease is not as sharp as hoped economists were forecasting that the headline annual cpi inflation rate was going to drop to 62 year over year the consensus was for a core reading of 54 on an annual basis the monthonmonth readings were expected to be up 04 compared to minus 01 in december and a core unchanged at 03 stock bulls want to see further signs that inflation  which hit a fourdecade peak of 91 in june  was waning the newest numbers are indicating thats happening but maybe slower than hoped the january inflation data and the january employment report highlight the strength of the us economy even though the federal reserve has been raising interest rates and support the likelihood of further rate rises the fed raised the federal funds rate by 25 basis points earlier this month bringing the benchmark rate to a range of 45 to 475 the odds of a 25 basis point increase in may and june increased tuesday morning after the january inflation the disinflation of recent months has encouraged investors to hope the federal reserve can soon stop raising interest rates thereby allowing the economy to avoid a sharp contraction and thus support corporate earnings this narrative has helped lift the sp 500 by 78 so far this year the strength of core inflation suggests that the fed has a lot more work to do to bring inflation back to 2 said maria vassalou goldman sachs asset managements cochief investment officer of multiasset solutions if retail sales also show strength tomorrow the fed may have to increase their funds rate target to 55 in order to tame inflation vassalou said but ellen zentner chief us economist at morgan stanley said without worsening inflationary pressures in todays report the fed will see more evidence accumulating that inflation is decelerating despite a stronger than anticipated labor market zentner expects the fed to add another 25 basis point in may and after that the central bank will be largely set after may a slowing labor market and more moderate inflation outcomes should set the stage for a stop in the tightening cycle and an eventual first rate cut in december zentner said meanwhile the corporate earnings reporting season is drawing to a close with most reports in earnings for sp 500 index companies were down about 20 during the last three months of 2022 the first decline since the third quarter of 2020 most companies beat analysts forecasts but the share of negative surprises rose