Traders work on the floor of the New York Stock Exchange during afternoon trading on April 09, 2024 in New York City.
Michael M. Santiago | Getty Images
Stock futures fell Wednesday morning after March inflation data came in hotter than expected.
Futures tied to the Dow Jones Industrial Average declined 339 points. S&P 500 and Nasdaq-100 futures fell 0.9% each.
The consumer price index in March rose faster than economists had estimated, suggesting stubborn inflation and pushing back expectations for an interest rate cut by the Federal Reserve. The CPI rose 0.4% for the month and 3.5% year-over-year. Economists polled by Dow Jones had forecasted an increase of 0.3% month over month and 3.4% year on year. Core CPI, which excludes volatile food and energy prices, accelerated 0.4% from the previous month while rising 3.8% from a year ago, compared to estimates for 0.3% and 3.7%, respectively.
Fed funds futures trading data suggests a 46% likelihood that the central bank will hold steady on rates in June, according to the CME FedWatch Tool.
A hotter-than-expected inflation reading could lead to a serious pullback after the market’s run-up this year, while a cooler print could lead Treasury yields to pull back and lift the equity market, according to Quincy Krosby, chief global strategist at LPL Financial.
“The market is increasingly concerned that inflation remains more stubborn, or perhaps even stalled in its downward trajectory,” Krosby said. “There’s a whiff of stagflation hovering over markets if the Fed goes ahead with initiating the easing cycle without inflation quickening its downward path.”
In addition to the big inflation report on Wednesday, investors are also looking forward to the meeting minutes from the Fed’s gathering last month. They will be hunting for clues on where policymakers stand on expected rate cuts this year.
