Stocks took a dive and cryptocurrencies displayed mixed signs after January's CPI report revealed higher-than-expected inflation, casting a shadow on hopes for Federal Reserve rate cuts.

Key takeaways:

Inflation persists Consumer prices rose 0.3% in January, exceeding forecasts and pushing the year-over-year increase to 3.1%.

Stocks sink S&P 500 and Nasdaq Composite plummeted 1.4% and 1.7%, respectively, at the opening bell.

Crypto split Bitcoin dipped slightly after briefly surpassing $50,000, while Ether surged 4%.

Rate cut hopes fade The likelihood of a Fed rate cut in March or May dipped, based on futures data.

Fed maintains stance New York Fed survey predicts elevated inflation, keeping pressure on the Fed.

The higher-than-expected inflation data sparked concerns that the Fed might remain hawkish on interest rates, dampening investor sentiment in stocks. While Bitcoin displayed early weakness, Ether's rise suggests some crypto investors remain optimistic about the future.

The key question now is whether inflation eases in the coming months, potentially paving the way for a dovish shift from the Fed. Until then, expect continued volatility in both traditional and crypto markets.