Wall St set for steep losses after March consumer prices data

  • Reuters
  • Stock Market News
Wall St set for steep losses after March consumer prices data
Credit: © Reuters

By Shashwat Chauhan and Shristi Achar A

(Reuters) - Wall Street's main stock indexes were set to open sharply lower on Wednesday after a hotter-than-anticipated inflation reading dampened hopes of the Federal Reserve kicking off the monetary easing cycle in June.

A Labor Department report showed the Consumer Price Index (CPI) rose 0.4% on a monthly basis in March, compared with the 0.3% increase expected by economists polled by Reuters. Annually, it increased 3.5%, versus a 3.4% estimated growth.

Excluding volatile food and energy components, the core figure rose 0.4% month-on-month in March, against expectations of a 0.3% advance. Annually, it gained 3.8%, versus the estimated 3.7% increase.

"Data was hotter than expected, both on the top line and the core number, and that's driven futures down because it's indicative of sticky inflation and the potential for the Fed to either cut fewer times or not at all in 2024," said Robert Pavlik, senior portfolio manager at Dakota Wealth.

"I don't think it speaks to the need for a rate hike, but stocks have to be re-priced for a different environment which is presenting itself with this inflationary data."

Yields across government bonds spiked after the data was released, with the yield on the 10-year note last at 4.4927%.

Traders slashed bets of the Fed cutting interest rates in June after the CPI numbers. They now see the likelihood of an interest-rate cut at the Fed's June 11-12 meeting as less than 50%, down from 58% before the report, based on the prices of rate futures.

Minutes from the Fed's March meeting, where it stuck to its guidance of three rate cuts this year, are due later in the day and could be key in gauging the central bank's stance on cutting interest rates.

Atlanta Fed President Raphael Bostic said in an interview to Yahoo Finance on Tuesday that it was possible the Fed may not cut interest rates at all this year if the progress on inflation stalls and the economy continues to outperform.

The Nasdaq and the S&P 500 posted modest gains in the last session, although declining financial shares weighed ahead of the unofficial start to the first-quarter earnings season.

Banking giants JPMorgan Chase (NYSE: JPM ), Citigroup and Wells Fargo (NYSE: WFC ) are scheduled to report towards the end of the week.

At 8:37 a.m. ET, Dow e-minis were down 440 points, or 1.12%, S&P 500 e-minis were down 67.25 points, or 1.28%, and Nasdaq 100 e-minis were down 262 points, or 1.43%.

© Reuters. Traders work on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., April 5, 2024. REUTERS/Andrew Kelly

Delta Air Lines (NYSE: DAL ) advanced 3.8% after the carrier offered an upbeat outlook for the current quarter and topped Wall Street estimates for first-quarter earnings on buoyant travel demand.

U.S.-listed shares of Alibaba (NYSE: BABA ) gained 1.8% after the company's co-founder Jack Ma penned a lengthy memo to employees on Tuesday, expressing support for the internet giant's restructuring efforts - a rare move from the billionaire, who has spent the last few years away from the spotlight.

Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or

100