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Wall Street Rally Fades Post-Inflation Data; Awaits Fed Minutes

U.S. stock indexes relinquished most of their gains on Wednesday as investors reassessed the outlook for U.S. monetary policy after releasing inflation data. The focus then shifted to the Federal Reserve's March meeting minutes.

Trader on the NYSE looks at monitors displaying stock markets
Trader on the NYSE looks at monitors displaying stock markets

Consumer Prices Show Minimal Increase in March

Stock futures experienced a close to 1% rally, and Treasury yields slid as data indicated that U.S. consumer prices experienced only a minor increase in March due to a decline in gasoline costs.

Investors Focus on Underlying Inflation Pressures

However, the primary benchmarks quickly lost their gains and briefly dipped as investors concentrated on underlying inflation pressures, which increased in line with economists' predictions.

Market Strategist Comments on Inflation and the Fed's Focus

Michael O'Rourke, a chief market strategist at JonesTrading, stated that the initial reaction was excessive, as the beat was on the headline instead of the core number, which the Federal Reserve is more focused on.

Money Market Participants Expect Rate Hike Next Month

Money market participants maintained their bets that the U.S. central bank would raise rates by 25 basis points the following month, as per CME Group's Fedwatch tool.

Fed Presidents Comment on Inflation and Rate Hikes

Richmond Fed President Thomas Barkin dampened market optimism by emphasizing that more time was needed before inflation fell back to the Fed's 2% goal. San Francisco Fed President Mary Daly also stated that there was "more work to do" on Fed rate hikes.

Major Tech and Growth Stocks Give Up Early Gains

Significant technology and growth stocks such as Alphabet Inc, Tesla Inc, and Inc surrendered early gains, falling between 0.2% and 1.3%.

Sector Performance and Upcoming Events

Consumer discretionary was the hardest hit among the 11 major S&P sectors, while materials and healthcare experienced the most significant gains. Investors now await the minutes from the U.S. central bank's March policy meeting and the upcoming first-quarter earnings season, which begins on Friday with results from Citigroup Inc, JPMorgan Chase & Co, and Wells Fargo & Co.