This Wednesday, Wall Street's main stock indices recorded significant falls after a report on the inflation was higher than expected, which reduced expectations that the Federal Reserve (Fed) will begin to relax its monetary policy in June.
He Dow Jones Industrial Average It fell 520.39 points, a decrease of 1.34%, closing at 38,363.28 units.
The S&P 500 decreased 61.30 points, or 1.18%, to 5,148.61 points, while the Nasdaq Composite lost 177.10 points, or 1.09%, to 16,129.54 points.
Inflation and Market Reaction
The United States Department of Labor revealed that the Consumer's price index (CPI) rose 0.4% in March, exceeding the 0.3% expectation forecast by analysts polled by Reuters.
On an annual basis, the CPI rose 3.5%, compared to an estimate of 3.4%. Excluding volatile food and energy prices, the core CPI also rose 0.4% month-on-month, versus a forecast of 0.3%, and 3.8% annually, beating the expected 3.7%.
Dakota Wealth's Robert Pavlik commented that the CPI results were “more bullish than expected” and suggest “sticky inflation” that could limit the Fed's ability to reduce interest rates in 2024.
Implications for Fed Monetary Policy
The Fed's March meeting minutes, due to be released later in the day, are highly anticipated by markets as they will provide more details on the Fed's projections for three possible rate cuts this year.
These documents are crucial to understanding the entity's future stance on monetary policy.
Financial Results Season
Additionally, investor attention turns to the first-quarter earnings season, which will intensify at the end of the week with reports from banking giants such as JPMorgan Chase, Citigroup and Wells Fargo.
These results could offer new insights into the economic health of corporations and the impact of current market conditions.
Performance by Sectors
All S&P 500 sectors were in the red during the day, led by the real estate sector, which is particularly sensitive to changes in interest rates. This sector experienced the largest decline with a decline of 3.3%.
This set of events underscores a period of uncertainty and volatility in financial markets, where inflation and the Fed's monetary policy decisions play a critical role in determining market trends.
Investors continue to evaluate the outlook cautiously as they adjust to new economic realities.
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