Stocks sink after hot March inflation data
Prices for beef, vegetables and rent are running above the March inflation rate
QI Research CEO and chief strategist Danielle DiMartino Booth discusses whether stubbornly high inflation data will delay Fed rate cuts on 'Making Money.'
U.S. stocks sank across the board after hotter-than-expected inflation data dimmed hopes of a June rate cut by the Federal Reserve.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| I:DJI | DOW JONES AVERAGES | 43268.94 | -120.66 | -0.28% |
| SP500 | S&P 500 | 5916.98 | +23.36 | +0.40% |
| I:COMP | NASDAQ COMPOSITE INDEX | 18987.468095 | +195.66 | +1.04% |
The Dow Jones Industrial Average fell more than 500 points in volatile trading following the release of the data on Wednesday and closed with a 422.16 point loss or 1%. The Nasdaq Composite and S&P 500 fell 0.8% and 0.9%, respectively.
Treasury yields spiked, with the 10-year hitting 4.5% for the first time in 2024, and the 2-year yield hovering just below 4.9%.
WHERE ARE HIGH PRICES HITTING AMERICAN FAMILIES THE HARDEST?
The consumer price index rose 3.5% annually in March and 0.4% vs. the prior month. Both exceeded economists' forecasts. Core prices rose 3.8% annually. Rent costs rose 5.7%, while grocery prices climbed 1.2% on an annual basis. The price of lettuce was up 5.8% while beef and veal soared 7.6%. Gas prices are also heating up with oil trading around $85 per barrel. Prices at the pump rose 1.7% compared with February.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| USO | UNITED STATES OIL FUND - USD ACC | 72.31 | +0.25 | +0.35% |
"Particularly concerning for the Fed, inflation of services prices excluding energy and housing has persisted well above the pre-pandemic rate, and actually picked up a bit since the turn of the year," Bill Adams, chief economist at Comerica Bank, explained in written commentary.
"Service providers who tend to change prices less frequently, like insurers and healthcare providers, have made big price increases in recent months to pass on higher operating costs. That is contributing to the stickiness of inflation in the first half of 2024," said Adams.
WHY ARE GROCERIES STILL SO EXPENSIVE?
Seventy-eight percent of market participants expect the Fed to hold rates steady at the June meeting, while 54% expect the same in July, as tracked by the CME's Fed Watch Tool. Further economic data will likely shape these projections.