A dip in January consumer confidence reignited fears of stagflation on Wall Street, adding fuel to the sell-off in major equity indexes, which started before the report's release at 10 a.m. ET. However, Wall Street missed a couple of bright spots in the report.

The Conference Board's Consumer Confidence Index decreased in January, after an increase in December, suggesting that the consumer-led recovery from the pandemic recession may be slowing down.

The dip in consumer confidence comes at a time of high inflation, suggesting that the economy may be heading to stagflation, a combination of slow growth and elevated inflation.

That's not a good place for Wall Street to be, as stagflation hurts both the top and the bottom lines of listed companies. Thus, the added pressure to sell shares after the report's release.

Still, a close look at the report reveals a couple of bright spots, which Wall Street seems to ignore, at least for now.

The Consumer Confidence Index includes two components.

The Present Situation component measures how consumers assess the current business and labor market conditions.

The Expectations component assesses how consumers feel about income, business and labor market conditions in the near future.

One of the bright spots of the January report is the Present Situation Index, which improved to 148.2 from 144.8 in December. Another bright spot is that the proportion of consumers who plan to buy high-ticket items like automobiles increased. A third bright spot is the ease in the inflationary expectations component of the Expectations index.

"Consumer confidence moderated in January, following gains in the final three months of 2021," said Lynn Franco, senior director of economic indicators at The Conference Board. "The Present Situation Index improved, suggesting the economy entered the new year on solid footing. However, expectations about short-term growth prospects weakened, pointing to a likely moderation in growth during the first quarter of 2022. Nevertheless, the proportion of consumers planning to purchase homes, automobiles and major appliances over the next six months all increased.

"Meanwhile, concerns about inflation declined for the second straight month, but remain elevated after hitting a 13-year high in November 2021. Concerns about the pandemic increased slightly, amid the ongoing Omicron surge. Looking ahead, both confidence and consumer spending may continue to be challenged by rising prices and the ongoing pandemic."

In addition, consumer confidence and consumer spending will be challenged by the pace at which the Federal Reserve removes accommodation from the economy and raises interest rates, critical for consumer spending on high-ticket items. Also, they will be challenged by Wall Street's sell-off, which destroys wealth, another crucial factor for consumer confidence and consumer spending.