U.S. Stocks Likely To Come Under Pressure Following Hotter-Than-Expected Inflation Data
Stocks are likely to come under pressure in early trading on Wednesday amid a negative reaction to a highly anticipated report on consumer price inflation. The major index futures are currently pointing to a sharply lower open for the markets, with the S&P 500 futures down by 1.3 percent.
The futures plunged following the release of a Labor Department report showing U.S. consumer prices advanced by slightly more than expected in the month of March.
The Labor Department said consumer prices climbed by 0.4 percent in March, matching the increase seen in February. Economists had expected consumer prices to rise by 0.3 percent.
Excluding prices for food and energy, core consumer prices still rose by 0.4 percent for the third consecutive month. Core consumer prices were also expected to increase by 0.3 percent.
The report also said the annual rate of consumer price growth accelerated to 3.5 percent in March from 3.2 percent in February. Economists had expected a more modest acceleration to 3.4 percent.
Meanwhile, the annual rate of core consumer price growth came in at 3.8 percent in March, unchanged from February. Core price growth was expected to slow to 3.7 percent.
The data is likely to add to recent worries the Federal Reserve will hold off on lowering interest rates amid ongoing inflation concerns.
Fed officials have repeatedly said they need greater confidence inflation is slowing before they consider cutting rates.
Treasury yields have surged in reaction to the report, with the yield on the benchmark ten-year note jumping to its highest levels in almost six months.
Later in the day, the Fed is due to release the minutes of its latest monetary policy meeting, which may shed additional light on the outlook for interest rates.
Following the lackluster performance seen on Monday, stocks saw considerable volatility over the course of the trading session on Tuesday. The major averages fluctuated as the day progressed, with the Nasdaq and the S&P 500 eventually closing in positive territory.
While the Nasdaq rose 52.68 points or 0.3 percent to 16,306.64 and the S&P 500 inched up 7.52 points or 0.1 percent to 5,209.91, the narrower Dow ended the day slightly lower, edging down 9.13 points or less than a tenth of a percent to 38,883.67.
In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index fell by 0.5 percent, while Hong Kong’s Hang Seng Index surged by 1.9 percent.
European stocks have also turned mixed following the release of the U.S. inflation data but continue to see modest strength. While the U.K.’s FTSE 100 Index is up by 0.3 percent, the German DAX Index is down 0.1 percent and the French CAC 40 Index is down by 0.2 percent.
In commodities trading, crude oil futures are rising $0.37 to $85.60 a barrel after tumbling $1.20 to $85.23 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,350.40, down $12 compared to the previous session’s close of $2,362.40. On Tuesday, gold climbed $11.40.
On the currency front, the U.S. dollar is trading at 152.32 yen compared to the 151.76 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0786 compared to yesterday’s $1.0857.
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