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US stocks opened sharply lower on Wednesday after a key inflation report showed an unexpected uptick in consumer prices last month.
The Dow Jones Industrial Average (^DJI) fell over 1%, or more than 400 points, while the S&P 500 (^GSPC) dropped about 1.2%. The tech-heavy Nasdaq Composite (^IXIC) was down over 1.2%.
Meanwhile, bond yields soared. The 10-year Treasury yield (^TNX) gained as much as 14 basis points on Wednesday morning, touching above 4.5% for the first time in 2024.
The Consumer Price Index (CPI) rose 0.4% over the previous month and 3.5% over the prior year in March, an acceleration from February’s 3.2% annual gain in prices.
Both measures came in ahead of economist forecasts of a 0.3% month-over-month increase and a 3.4% annual increase, according to a survey by Bloomberg.
The hotter-than-expected print could prompt investors to expect fewer rate cuts from the Fed this year. According to the CME FedWatch tool, around 75% of bets are now on the Fed holding steady at current rate levels in June. More than half of investors also expect the central bank to leave the rate unchanged through its July meeting.
Still on deck Wednesday are the minutes from the Fed’s meeting in March, likely to be highly scrutinized for any hints of crumbling in policymakers’ expectations for rate cuts.
First-quarter earnings season kicked off with results from Delta (DAL), in focus as the airline industry grapples with the fallout from Boeing’s (BA) ongoing troubles. Shares in the carrier popped almost 3% after its earnings topped expectations.
That sets the stage for reports on Friday from big Wall Street banks, whose profits aren’t expected to dazzle even as Wall Street looks for a bumper season.
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