The Dow bleeds as stubborn inflation goes the wrong way and dashes Fed interest rate hopes
The Dow Jones Industrial Average and the other major U.S. stock market indexes were bleeding Wednesday as March inflation data came in higher than anticipated.
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The Consumer Price Index (CPI) for March showed an annual rate of inflation of 3.5%, up from 3.2% in February, primarily because of rising rents and gas prices. Economists had predicted an inflation rate of 3.4% — still down from 2022 highs but well below the Fed’s target rate of 2%.
The data left investors uncertain about whether the Federal Reserve will cut interest rates this year as hoped. The latest Fed meeting minutes were set to be released Wednesday afternoon and could give investors more information about what monetary policymakers are thinking about the economy and interest rate cuts this year.
The Dow quickly plunged more than 500 points shortly after markets opened. It had recovered some of those losses to be down 460 points, or 1.2%, to 38,436 near midday — now far from crossing the 40,000 mark like it almost did just a few weeks ago. The S&P 500 and the Nasdaq were both down about 1%
Meanwhile, the 10-year Treasury yield went up 4.5% on Wednesday after the inflation report.
Airline stocks flying high
Airline stocks were among the top performers Wednesday. Delta Air Lines beat first-quarter earnings expectations, reporting $12.6 billion in revenues compared to the analysts expectations of $12.46 billion. The airline turned $37 million profit and said revenue growth is expected to reach a record level during the summer travel season.
United Airlines stock was up about 2.7% near midday.
Other airlines stocks, including United Airlines and American Airlines, also rose Wednesday.
AI stocks are up
AI stocks were performing OK on Wednesday. AI chipmaker Nvidia’s stock was up about 2%, a day after falling into correction territory as Google parent Alphabet and Intel each unveiled new chips to compete with Nvidia.
Nvidia employees are getting a one-time “Jensen special grant” of an additional 25% of stock units Business Insider reports.
Nvidia stock was up about 1.4% near midday. Super Micro Computer stock was up slightly.
The crypto market is on a bumpy ride
The crypto market declined on Wednesday after the inflation data release. Cryptocurrencies recovered a bit in mid-morning trading but were still in the red. Bitcoin has dropped about 0.7% over the past 24 hours and was trading around $68,000. The second largest cryptocurrency, Ether, saw a 0.8% decline, hovering around $3,400.
