The Labor Department's core Consumer Price Index, which excludes the volatile food and energy components, increased 0.3 per cent in January, while economists polled by Reuters had forecast an increase of 0.2 per cent.
Brent crude, used to price worldwide oils, lost 20 cents to $62.59 a barrel in London.
NuVista Energy bucked the energy trend to rise 3 per cent to C$7.83 after Eight Capital and Raymond James raised their target prices.
While the German DAX Index has fallen by 0.8 percent, the French CAC 40 Index is down by 0.5 percent and the U.K.'s FTSE 100 Index is down by 0.3 percent.
"Inflation has to be put into context", said Joseph LaVorgna, the chief economist for the Americas at Natixis in NY. Volume on the TSX index was 219.33 million shares.
Stocks opened lower after the latest reading on inflation came in hotter than expected. The Dow Jones Small-Cap Growth TSM Index closed at 9,449.10 for a gain of 187.07 points or 2.02%.
So the inflation worries were legitimate and, therefore, the fear of faster rising interest rates in the U.S. was a good call but the overnight stock market reaction, which was positive before the close, suggests Wall Street has done all the panicking it needs to do, for the moment. They, along with Netflix and Alphabet - collectively called the FAANG stocks - were major contributors to last year's market rally, and some of them have weathered the recent sell-off better than the broader market.
As such, the US economy is on track to grow about 3.1 percent in 2018, according to Credit Suisse, following the budget deal last week.
"We are now beginning to reach levels at or above previous peaks", he added. The Dow edged up 39.18 points or 0.2 percent to 24,640.45, the Nasdaq advanced 31.55 points or 0.5 percent to 7,013.51 and the S&P 500 rose 6.94 points or 0.3 percent to 2,662.94.More news: Here's how people reacted to Elizabeth Warren's speech
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That comes after a remarkably calm year for stocks: there were only eight days in 2017 where the S&P 500 rose or fell at least 1 percent.
The major USA index futures are pointing to a sharply lower opening on Wednesday following the rebound seen over the three previous sessions.
Benchmark U.S. 10-year Treasury yields were near their session highs at 2.8894 percent, but a key measure of near-term volatility fell, in contrast to its reaction to strong U.S.jobs and wages data earlier in the month.
Following Wall Street's recent swings, the S&P 500 is down 0.4 per cent for the year. Heating oil fell 2 cents to $1.84 a gallon.
Fossil Group (FOSL.O) jumped almost by 70% as it reported better-than expected quarterly results.
After seeing initial weakness, stocks turned higher over the course of the trading session on Tuesday.
On a like-for-like basis revenue per available room - known as RevPAR in the hotel trade - rose 3.8% in the fourth quarter, driven by increases in the average daily rate - hotel room revenue divided by the total number of room nights sold for a given period - and occupancy.
Advancing issues outnumbered declining ones on the NYSE by a 2.28-to-1 ratio; on Nasdaq, a 2.94-to-1 ratio favoured advancers.