In a day marked by turbulent trading, Wall Street’s major stock indexes struggled to find a clear direction as traders grappled with the implications of hotter-than-anticipated consumer prices data. Despite concerns over rising inflation, expectations of potential rate cuts by the Federal Reserve in the coming months lingered among investors.
According to a recent report from the Labor Department, US consumer prices surged in February, primarily driven by higher petrol and shelter costs. This uptick in inflation suggests a degree of persistence that could potentially delay an anticipated interest-rate cut from the Federal Reserve, previously speculated to occur in June.
The Consumer Price Index (CPI) rose by 0.4 percent last month, following a similar climb in January. Even after excluding volatile food and energy components, consumer prices still increased by 0.4 percent in February, echoing the previous month’s trend.
Seema Shah, chief global strategist at Principal Asset Management, offered insights, noting, “The disinflationary trend is petering out, but inflation is not resurging.” This sentiment underscores the delicate balance between inflationary pressures and the potential for monetary policy adjustments.
Despite the inflationary concerns, traders continue to anticipate a rate cut, with the CME FedWatch Tool indicating a 70 percent probability of the first rate cut occurring in June, marginally down from previous estimations.
Against this backdrop, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite managed to eke out modest gains. However, the utilities sector faced losses, while rate-sensitive technology stocks offset some of the declines.
Oracle notably surged by 10.7 percent, buoyed by indications of progress in its cloud-computing market strategy, particularly with its partnership with AI chip giant Nvidia. Conversely, Boeing experienced a 4.1 percent dip following revelations of production issues with the 737 MAX, while Southwest Airlines plummeted by 12.9 percent due to lower-than-expected MAX deliveries forecasted by Boeing.
In other market movements, 3M saw a significant jump of 5.8 percent after announcing William Brown as its new CEO, effective May 1.
Despite a slightly higher number of declining issues compared to advancers on both the NYSE and Nasdaq, the S&P index recorded new highs with no new lows, while the Nasdaq witnessed a mix of new highs and new lows.
