U.S. Stocks Fluctuating Following Consumer Inflation Data

After an initial move to the upside, stocks have fluctuated over the course of morning trading on Wednesday. The major averages have pulled back off their early highs, with the tech-heavy Nasdaq dipping into negative territory.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is down 8.11 points or 0.1 percent at 12,023.76, the Dow is up 58.50 points or 0.2 percent at 33,743.29 and the S&P 500 is up 4.88 points or 0.1 percent at 4,113.82.

The volatility on Wall Street comes following the release of the Labor Department’s report on consumer price inflation in the month of March.

While the report showed consumer prices rose by less than expected, many economists said they still expect the Federal Reserve to raise interest rates by another quarter point early next month.

The Labor Department said its consumer price index inched up by 0.1 percent in March after climbing by 0.4 percent in February. Economists had expected consumer prices to rise by 0.3 percent.

The report also showed the annual rate of consumer price growth slowed to 5.0 percent in March from 6.0 percent in February.

The year-over-year growth was slower than the 5.2 percent expected by economists and marks the smallest 12-month increase since May 2021.

Meanwhile, the report also said core consumer prices, which exclude food and energy prices, rose by 0.4 percent in March after advancing by 0.5 percent in February. The increase matched economist estimates.

The annual rate of growth by core consumer prices accelerated to 5.6 percent in March from 5.5 percent in February, which was also in line with expectations.

“Though inflation has moderated, the March consumer price data keeps a 25bps rate hike by the Fed clearly on the table for May,” said Ryan Sweet, Chief U.S. Economist at Oxford Economics. “However, the odds of a pause in June are rising.”

He added, “The Fed has made it clear that the decision to hike at the last meeting was a close one, but services inflation remains strong, and the labor market is tight, therefore their work isn’t done.”

Later in the day, the Fed is due to release the minutes of its March monetary policy meeting, which may shed additional on the outlook for interest rates.

Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.

However, airline stocks have pulled back sharply after soaring in the previous session, dragging the NYSE Arca Airline Index down by 2.7 percent.

Banking and semiconductor stocks are also seeing some weakness in morning trading, while chemical and pharmaceutical stocks have moved to the upside.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan’s Nikkei 225 Index climbed by 0.6 percent, while China’s Shanghai Composite Index rose by 0.4 percent.

The major European markets have also moved to the upside on the day. While the U.K.’s FTSE 100 Index has advanced by 0.6 percent, the French CAC 40 Index and the German DAX Index are both up by 0.3 percent.

In the bond market, treasuries have pulled back near the unchanged line after an initial surge. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 3.437 percent after hitting a low of 3.342 percent.

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