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Stock Market News: Dow Slides After CPI Data
Nasdaq Composite and S&P 500 also fall.
Last Updated:
April 10, 2024 at 7:07 PM EDT
What to Watch Today
Stocks fell sharply after a hotter-than-expected inflation reading.
Bond yields spiked to multi-month highs. Oil prices turned higher.
The consumer price index climbed 3.5% year over year in March, according to data released Wednesday by the Bureau of Labor Statistics. For more coverage and analysis of the CPI report, click here.
Federal Reserve officials indicated at their last meeting that they needed more evidence inflation was heading lower before reducing rates, minutes show.
Odds of a June rate cut were down to 27% from 57.4% on Tuesday, according to the CME FedWatch Tool.
Key Events
18 days ago
18 days ago
18 days ago
Latest Updates
Stocks sank and bond yields spiked on Wednesday after the latest inflation reading poured cold water on hopes the Federal Reserve will cut interest rates sooner rather than later.
The Dow Jones Industrial Average was down about 423 points, or 1.1%. The S&P 500 was down nearly 1%. The Nasdaq Composite was down 0.8%. All three rallied from session lows in the final hour of trading.
The 2-year Treasury yield spiked to 4.969%, marking its largest one-day increase since March 27, 2023, according to Dow Jones Market Data. The 10-year yield rose to 4.559%, its largest one-day uptick since Sept. 22, 2022. Both milestones are based on yields at 3 p.m. ET.
After the March consumer price index came in hotter-than-expected Wednesday morning, traders put just 41% odds of at least one rate cut through the next three Federal Open Market Committee meetings, according to the CME FedWatch Tool.
That is down from 75% on Tuesday, when traders saw a 23.9% chance of 50 basis points in cuts through the July meeting.
“Although we continue to see downside risks to growth (and eventually inflation), the optics of 300K payroll prints, 0.4% m/m core inflation readings, exceptionally easy so-called financial conditions and a central bank planning to cut rates/ease multiple times with an election approaching are nothing short of a disaster for the Fed,” writes Roth MKM chief economist and market strategist Michael Darda.
The team at Yardeni Research wrote the CPI may lead to questions as to whether the Fed should start raising the fed-funds rate, rather than cutting it.
“The previous two reports, for January and February, were also hotter than expected,” they wrote. “We don't think that the Fed will raise rates again this year, but we've pushed back against the widely held notion of several cuts this year and argued that no cuts at all was becoming increasingly likely. Now that's our base-case scenario.”
18 days ago
The auction for the 10-year Treasury was poorly received.
The auction of $39 billion worth of government debt expiring in 10 years was awarded a high yield of 4.560%, 3.1 basis points higher than what was expected or indicated before the auction.
It also surpassed the average of 4.207% in the past six such auctions.
When the government has to offer a higher yield for investors to absorb its debt, it is a bad sign for demand.
The tail—or difference in yield offered versus expected—was rather large this time around.
“The 10 yr auction today was bad,” wrote Peter Boockvar, chief investment officer at Bleakley Financial Group.
The auction for the 3-year note on Tuesday was also poorly received.
Treasurys sell off following U.S. March inflation data, sending yields to new multi-month highs.
Annual core CPI kept February's 3.8% pace, slightly beating expectations but raising concerns that the Fed won't be able to start cutting rates this summer.
Odds that it won't cut at all this year rise to 13%, from 2% yesterday, on the CME's FedWatch tool.
The 10-year yield gains 0.194 percentage point to 4.559%, its largest one-day gain since 2022, and the two-year rises 0.222 p.p. to 4.969%.
March producer price index tomorrow is expected to slow and weekly jobless claims are forecast to decline, in Wall Street Journal surveys.