Stock futures dipped on Wall Street as investors looked ahead to a second key inflation report. Futures tied to the Dow Jones Industrial Average slid 0.2%, while S&P 500 futures lost 0.2% and Nasdaq-100 futures fell 0.14%. The market reacted negatively on Wednesday to a hot March inflation reading that showed consumer prices grew 0.4% in March and 3.5% from a year earlier. This prompted some analysts, like Goldman Sachs chief economist Jan Hatzius, to adjust their forecast for rate cuts, now expecting two instead of three in 2024 with the first rate reduction predicted to happen in July.
The Dow Jones Industrial Average led Wednesday’s losses, dropping 1.09%, while the S&P 500 fell 0.95% and the Nasdaq Composite sank 0.84%. The selloff was widespread, with ten of the 11 S&P 500 sectors finishing in negative territory, led by real estate with a decline of more than 4%. The 10-year Treasury note rate topped 4.5% and the 2-year Treasury yields surged close to 5%. Investors are now awaiting Thursday’s producer price index report, with economists expecting wholesale prices to have grown by 0.3% in March, and 0.2% when excluding food and energy. Additionally, weekly jobless claims are also due before the bell.
The market is also focused on the ongoing earnings season, with CarMax, Fastenal, and Constellation Brands set to report before the bell on Thursday. The unofficial start to the period will commence on Friday with big bank earnings from JPMorgan, Wells Fargo, and Citigroup. Investors are closely watching these earnings reports for insights into the state of the economy and corporate performance, which could have an impact on market sentiment and future investment decisions.
Jan Hatzius remains optimistic about rebalancing the labor market and bringing down inflation over time, despite the recent inflation readings. He emphasized that the timing of the Federal Reserve’s adjustments will now depend more on month-on-month inflation news, which has been disappointing. Investors will continue to monitor economic indicators and central bank decisions for signals on future rate cuts and policy adjustments in response to inflation and labor market dynamics.
The market’s reaction to the inflation reports and Fed’s meeting minutes underscores the importance of data and economic indicators in guiding investor sentiment and market movements. As inflation concerns persist, investors will closely watch for any signs of moderation in price pressures and the Fed’s response. The upcoming earnings reports and economic data releases will provide further insights into the state of the economy and corporate performance, shaping market expectations and investment decisions in the coming weeks. Amidst ongoing uncertainty and volatility, staying informed and monitoring key developments will be crucial for investors navigating the current market environment.
