Wall St ends sharply lower as sticky inflation dims rate cut hopes
All three major U.S. stock indexes veered sharply lower at the opening bell after the Labor Department's Consumer Price Index (CPI) report landed north of consensus, a reminder that inflation's road back down to the Fed's 2% target will remain a long and meandering one.
«The stickiness of inflation data caused a 'sell first ask questions later' mentality,» said Ryan Detrick, chief market strategist at Carson Group in Omaha. «And that disappointment caused a push-back on not only the potential timing of the first rate cut but how many we're going to get.»
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.
«Just a week ago (Fed Chairman Jerome) Powell hinted at three cuts,» Detrick added. «One has to wonder if his opinion has changed after the stubborn data we continue to see.»
Equity prices were further pressured by benchmark Treasury yields, which breached 4.5% to touch the highest level since November.
Interest rate-sensitive stocks were hardest hit, with real estate primed for its biggest one-day percentage drop since June 2022.
Housing stocks registered their biggest daily decline since Jan. 23 and the Russell 2000 notched its steepest one-day slide since Feb. 13.
«Anything related to rates has clearly been hit hard today, from real estate to housing to small caps,» Detrick said.
Financial markets have now priced in a dwindling 16.5%
