Stocks fell and bond yields rose again on Wednesday as the consumer price index hit high on inflation.
Markets were essentially flat in early April as market participants readjusted their bets on when the Federal Reserve would start cutting interest rates. Although the central bank remains committed to three rate cuts in 2024, persistently high inflation, a strong labor market, and strong economic growth have prompted the Federal Reserve’s interest rate-setting body, the Federal Open Market Committee (FOMC), to begin easing. Expectations regarding the timing have receded.
As a result, Wednesday’s release of the Consumer Price Index (CPI) had a major impact on market thinking. Experts say the data-dependent Fed is likely to delay its first rate cut after the CPI revealed that inflation accelerated sharply last month. Some experts argue that three cuts to 2024 are off the table.
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Headline inflation rose 0.4% in March. Bureau of Labor Statistics The figures announced Wednesday were higher than economists had expected for a 0.3% increase. On an annual basis, headline inflation he increased by 3.5%. This was up from 3.2% the previous month and exceeded print’s expectations of 3.1%.
Core CPI removes volatile foods and foods. energy It is considered more expensive and better able to predict future prices, reaching 0.4% month-on-month, similar to the previous two months. Economists had expected core prices to rise by just 0.3%. On an annualized basis, core CPI rose 3.8%, in line with last month, compared to the expected 3.7% rise.
Fed Chairman Jerome Powell and the Federal Open Market Committee (FOMC) are looking for sustained evidence that inflation is falling to 2% before cutting interest rates from a 23-year high. The calculations are likely to change in the latest CPI report, and it could take a little longer for monetary accommodation to be lifted at the next Fed meeting. Some expert commentary on the CPI report argues that three rate cuts in 2024 are no longer on the table.
“While today’s inflation numbers likely close the door on a June rate cut, the Fed remains highly motivated to start the rate cutting cycle this year,” said Lauren Goodwin, economist and chief market strategist. said. New York Life Investments.
As of April 10, futures traders had placed the probability of the first quarterly point rate cut in June at 15%, down from 56% the day before, according to CME Group. fedwatch tool.
Blue-chip stocks at Monday’s closing price Dow Jones Industrial Average The benchmark was down 1.1% to 38,460. S&P500 It fell 1% to 5,160.High-tech oriented Nasdaq Composite The number of cases decreased by 0.8% to 16,170.
Earnings season on deck
this week’s earnings calendar Friday’s earnings results for several major banks, including the Bank of America, were relatively light. JP Morgan Chase (JPM), citygroup (C) and wells fargo (WFC), marking the start of the first quarter reporting season.
Consensus “buy” rating for JPM dow jones stocksAnalysts, on average, expect Money Center Bank to report earnings per share of $3.88 (down 5.4% year-over-year) and revenue of $38.8 billion (down 1.4% year-over-year).
“March-to-December results for U.S. global banks are likely to improve sequentially, but year-on-year comparisons are likely to be flat or down,” said Kenneth Leung, an analyst at CFRA Research. Ta.
Leung said that while a healthy economy bodes well for loan growth, credit card transactions and financial services, rising interest rates will reduce banks’ net interest income (the difference between the income earned on loans and the cost paid on deposits). (an important measure of profitability). Commercial services.
Leung said JPM has the best chance of beating expectations in the first quarter among large banks, adding that the Dow Jones stock is “performing well and is poised for further growth on the back of a healthy U.S. economy and consumers.” I think there is room,” he added. , unemployment rate is low and credit is stable. ”
Nvidia screwed up big time.
In individual stock news, Nvidia (NVDA) rose 2% in a down market, but this may be due to technical reasons rather than fundamentals.
The leading maker of generative AI data center chips is one of the most important members of the Magnificent 7 stocks that have driven much of the recent rally. However, on Tuesday, NVDA stock briefly entered correction territory – a 10% drop from its recent high. intel (INTC) has announced a competing AI chip called Gaudi 3.
Wednesday’s rally, likely led by techies and bargain hunters, allowed NVDA to close with a profit, but the stock has been under pressure in recent weeks.Nevertheless, Nvidia still best stocks of all time.whoever put it in Invested $1,000 in Nvidia stock 20 years ago I’m sure they’ll be very happy with their return today.
