Wall Street closes lower after Fed minutes, inflation data

  • Fed Minutes Reveal FOMC Considered Rate Hike Pause
  • Headline CPI is cooler than expected, core is sticky
  • American Airlines drops Q1 profit outlook

NEW YORK, April 12 (Reuters) – U.S. stocks edged lower on Wednesday minutes after the Federal Reserve’s March policy meeting.

The minutes followed a cooler-than-expected inflation report that belied sticky underlying data and confirmed the prospect of another policy rate hike when the central bank meets next month.

All three major US stock indices ended in negative territory throughout the session.

“The minutes make it clear that the Fed continues to be concerned about the banking crisis and inflated prices,” said Greg Bassuk, CEO of AXS Investments in New York.

Indices began to gyrate as market participants dissected the labor sector’s Consumer Price Index (CPI).

The report said prices paid by urban consumers for a basket of goods and services came in below analysts’ expectations, suggesting the central bank’s efforts to control inflation are taking effect.

However, core CPI – which strips out volatile food and energy items – hit the consensus bull’s eye, and is above the central bank’s average annual rate target of 2%.


“This week is an inflection point as investors look for firm footing ahead of tomorrow’s release of the corporate earnings and PPI (producer prices) report,” Bassuk said.

“(Economic) data is very mixed, so investors are overreacting to a positive or negative indication of Fed rate hike policy. Volatility will continue, and investors should fasten their seat belts. There’s a lot of uncertainty going on right now for both Wall Street and Main Street.”

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At last glance, financial markets are pricing in a 70% chance of another 25 basis point interest rate hike at the end of the FOMC’s policy meeting next month.

The next market-moving catalyst is likely to be the first-quarter earnings season, with results from three big banks on Friday — Citigroup Inc ( CN ), JPMorgan Chase & Co ( JPM.N ) and Wells Fargo & Co ( WFC ).N).

Analysts now expect total first-quarter S&P 500 earnings to fall 5.2% year-over-year, a sharp reversal from the 1.4% annual growth seen at the start of the quarter.

According to preliminary data, the S&P 500 (.SPX) lost 16.66 points, or 0.40%, to end at 4,092.28, while the Nasdaq Composite (.IXIC) lost 100.75 points, or 0.84%, to 11,931.13. The Dow Jones Industrial Average (.DJI) fell 32.16 points, or 0.10%, to 33,652.63.

American Airlines Group Inc ( AAL.O ) fell after forecasting lower-than-expected first-quarter profit.

Reporting by Stephen Culp; Additional reporting by Sruthi Shankar, Angika Biswas and Richard Chang in Bangalore

Our Standards: Thomson Reuters Trust Principles.

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