Traders work on the floor of the New York Stock Exchange during afternoon trading on April 9, 2024 in New York City.
Michael M. Santiago | Getty Images
Stocks fell sharply on Wednesday after higher-than-expected March inflation data could delay the Federal Reserve's interest rate cuts that investors had hoped for.
The Dow Jones Industrial Average fell 429 points, or 1.1%. The S&P 500 and Nasdaq Composite each fell 1%.
All sectors except energy were in the red in broad market indexes on the day. Real estate led the sector's decline on the day, down more than 3%. After a strong start to the year in which the benchmark rose 10% to a five-year high for the first quarter, the S&P 500 stalled in April on expectations for the latest inflation report. Ta.
According to a survey of economists compiled by Dow Jones, the CPI rose 0.4% month-on-month and 3.5% year-on-year in March, compared to expectations of 0.3% month-on-month and 3.4% year-on-year. Core CPI, which excludes volatile food and energy prices, rose 0.4% month-on-month and 3.8% year-on-year, compared to expectations of 0.3% and 3.7% increases, respectively. CPI for all items rose at an annual rate of 3.2% in April.
Federal funds futures trading data currently suggests there is only a 20.6% chance the Fed will cut rates at its June meeting, according to the CME FedWatch tool. Traders are now predicting that the first rate cut is likely to occur at the central bank's September meeting.
As the consumer price index (CPI) accelerated again in March from the previous month, the yield on the 10-year U.S. Treasury, a benchmark for mortgages and other loans, rose as the U.S. Federal Reserve expects inflation to return to its 2% target. Contrary to the expectations of the Federal Reserve Board (Fed), the rate has sharply exceeded 4.5%. The yield on two-year bonds rose to nearly 5%.
Bank stocks such as JPMorgan Chase & Co. and industrial stocks such as Caterpillar Co. fell 0.5% and 0.8%, respectively, on concerns that rising interest rates could begin to choke the economy. Microsoft and Apple, once popular tech stocks, also withdrew 1% each.
“A series of reports that the Fed has exceeded expectations makes it more difficult to make the case for the Fed to cut rates in the near term,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance. Ta.
Wealth Alliance President and Managing Director Eric Deaton said the market had managed to shake off the hot inflation numbers in January and February, but continued signs of inflation added to Wednesday's economic downturn. It is said that he is applying
“This is as good a catalyst as anything. I don't think this is the end of the bull market. But I do think it's an excuse for a lot of people who made a lot of money to take away some of that profit.” Walked away from the table ” Deaton said.
In addition to Wednesday's big inflation report, investors are also looking forward to the minutes from last month's Fed meeting. They will be looking for clues about where policymakers stand on expected rate cuts this year. These will be released at 2pm ET.
