Inflation Data Crushes Rate-Cut Hopes, Stocks Tumble

 

 Stocks Fall as Inflation Data Shatters Rate-Cut Hopes

U.S. equities fell on Thursday as statistics revealed that March's inflation rate remained stubbornly high, dash[ing] expectations of a Federal Reserve interest rate drop in the near future.

The S&P 500 sank 3.25 percent, the Nasdaq Composite fell 3.75%, and the Dow Jones Industrial Average fell 2.88%.

There was a widespread sell-off, as all 11 S&P 500 sectors ended the day lower than when they started.

March's estimate of the Consumer Price Index (CPI) was the highest since 1981, up 8.5% over the previous year.

Beyond forecasts, the core CPI—which does not include food and energy—rose by 6.5%.

The Fed may need to hike interest rates more quickly than previously anticipated in order to curb inflation, according to the scorching inflation statistics.

At its upcoming meeting in May, the Fed is anticipated to hike interest rates by 50 basis points.

Currently, there are bets among investors that the Fed may hike rates by 75 basis points.

Interest rate increases are probably going to have an impact on business profits and economic growth.

The stock market sell-off indicates that investors' concerns about the state of the economy are growing.

Additional variables impacting stocks

Investors are considering other variables, such as the ongoing conflict in Ukraine and the growing price of oil, in addition to fears about inflation.

Concerns about a worldwide economic downturn have been heightened by the conflict in Ukraine, and inflationary pressures are being exacerbated by the growing price of oil.

Next thing to watch

Investors will be keenly observing how the Fed responds to the report on inflation.

It is anticipated that the Fed would reaffirm its commitment to controlling inflation.

Investors, however, will be watching for any indications that the Fed is growing increasingly worried about the rate of economic expansion.

In June, the Fed will also make public its most recent estimates for the economy.

We'll be closely monitoring these estimates for any hints regarding the Fed's interest rate intentions.

In summary

U.S. equities fell on Thursday following statistics indicating that March's inflation rate remained obstinately high.

The Fed may need to hike interest rates more quickly than previously anticipated in order to curb inflation, according to the scorching inflation statistics.

Interest rate increases are probably going to have an impact on business profits and economic growth.

The stock market sell-off indicates that investors' concerns about the state of the economy are growing.