The March Core CPI reading came below economists’ expectations.
Investors finally got today’s consumer index report at 8:30 AM, which came with some positive news for the stock market. As analysis expected, March’s inflation rate is 8.4% year over year, which is the highest rate since 1981. However, as for the March consumer index, economists forecast a 1.1% increase in food and energy prices.
It is accurate to remind you that since the beginning of the Russian-Ukrainian war in late February, energy, and food prices have skyrocketed.
Moreover, experts believe that inflation is extraordinarily elevated at faster rates. As a result, some of them questioned the Biden administration’s ability to control and combat inflation.
The global distribution of the food and energy markets has a noticeable effect on U.S market prices. The stock market has its share of losses, starting with the tech stocks that experienced some large losses in the past weeks. This morning, the inflation report came in below the expected rate, which led to a rise in tech stocks by 1%. However, when compared to the previous year, the index is 5% lower.
Before moving to other industries, investors’ hopes were boosted by a slight increase in the inflation rate.
An economist believes that inflation is peaking and once that happens, it will take a downtrend to reverse. As a result of this positive, the market rebounded as follows:
The S&P 500 gained 0.67% to 4,442.15 points.The Dow Jones industrial average gained 0.49% and stands at 34,474.50 points. As for the Nasdaq index, it climbed by 1% to cover the previous session’s decline of 2%. The Russell 2000 has the biggest gains with a 1.6% increase, gaining 31.7 points. However, crude oil increased today from $94 to $100 per barrel. The west Texas intermediate has had some controversial ups and downs since the start of late February. WTI reached $130 per barrel in late March, and it now trades in a weekly range of $103 to $94.Silver rose by more than 3% and gold by 1%.
If these numbers and increases suggest one thing, it is that the peak is near, and inflation might decline in the upcoming months.
On the investors’ side, having a core reading below excitement means that the market is slowly recovering due to two factors. Slow but effective labor market expansion and wage increases
As for the core CPI reading in March, the report shows an increase estimated at 0.3%. While most experts and economists forecast a larger number than that.
On the subject of the bond market, the U.S Treasury yield declined after reaching three highs this week. According to the report, the U.S 10 year bond declined by 3.66% to 2.67 basis points.
Even if this report comes in below expectations, the numbers will remain hot, and the U.S economy will still suffer the consequences. As the date indicates, the U.S consumer index is increasing at an alarming rate that has not been seen since 1981. The FED, on the other hand, now has no choice but to become ultra-aggressive, which means reducing bond purchases and raising interest rates by 50%.