Wall St sinks on worrisome CPI reading

2024-04-11
Summary:

US stocks plunged Wednesday as unexpected inflation dashed hopes of a June rate cut. Treasury yields hit 4.5%, the highest since November.

US stocks tumbled to a lower close on Wednesday after hotter-than-expected inflation data threw cold water on hopes of rate cut in June. Benchmark Treasury yields breached 4.5% to touch the highest since November.

CPI rose 3.5% on an annual basis in March, accelerating for a second straight month, the BLS reported. Economists surveyed by Dow Jones had been looking for a 3.4% year-over-year level.


Minutes from the Fed's March policy meeting reflected concerns that inflation's progress toward that target might have stalled, and restrictive monetary policy may need to be maintained for longer than anticipated.


Analysts expect aggregate S&P 500 earnings in Q1 to grow 5.0% from last year, according to LSEG data. That is lower than the 7.2% growth which was forecast at the start of this year.


US stocks have “limited upside” from here, given the macroeconomic backdrop — and investors should be looking for better opportunities elsewhere, said Goldman Sachs Asset Management last month.


According to data from the investment bank, hedge funds are dumping stocks at the fastest pace in three months as what's often called " the smart money " stepped up bearish wagers against equities.

SPXUSD

The S&P 500’s pullback could be capped by its 50 SMA around 5,100, below which 4,950 acts as major support. Commodity prices have been on a roll, adding to inflation pressures and thereby detrimental to the index.


Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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