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 Amazon.com 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.