S&P 500 (SPY) Report – 04/10/24

Good morning, traders!

The S&P 500 ($SPY) is trading below yesterday’s close. Let’s get into it…

Stock market futures plunged on Wednesday following the release of March inflation data, which showed a higher-than-anticipated increase. This development suggests that the Federal Reserve might delay the anticipated interest rate cuts. The Dow Jones Industrial Average futures fell by 1.1%, while the S&P 500 and Nasdaq-100 futures dropped by 1.3% and 1.4%, respectively. The inflation report was particularly significant as the S&P 500 had previously seen a 10% rally, marking its best first-quarter gain in five years, fueled by expectations surrounding this data.

The Consumer Price Index (CPI) for March revealed a 0.4% monthly increase and a 3.5% rise compared to the previous year, slightly above economists’ predictions. Core CPI, which excludes the volatile food and energy sectors, also surpassed expectations by climbing 0.4% from the previous month and 3.8% from a year ago. These figures indicate a reacceleration of inflation, challenging the Federal Reserve’s goal of reducing inflation to its 2% target.

The report had immediate effects on the financial markets, with the 10-year Treasury yield jumping above 4.5% and bank and industrial shares falling in early trading. High-performing tech stocks like Nvidia and Meta also saw declines as investors reevaluated their expectations for Federal Reserve rate cuts. Market analysts expressed varying opinions on the report’s impact, noting that while it signifies a shift back towards concerns over inflation, it doesn’t necessarily alter the fundamental market trend.

Investors are now turning their attention to the minutes from the Federal Reserve’s last meeting, hoping to glean insights into the central bank’s future rate decisions. The anticipation of this information, coupled with the inflation report, has set a cautious tone in the stock market. Additionally, as the earnings season begins, with companies like Delta Air Lines reporting better-than-expected results, investors are keenly awaiting financial updates from major banks to gauge the overall health of the economy.

Wednesday Economic Events:
MBA Mortgage Applications 7:00am ET
CPI 8:30am ET – High Volatility Expected
Wholesale Inventories 10:00am ET
EIA Petroleum Report 10:30am ET – High Volatility Expected
10-Yr Note Auction 1:00pm ET – High Volatility Expected
FOMC Minutes 2:00pm ET – High Volatility Expected
Treasury Statement 2:00pm ET – High Volatility Expected

Fed Speaker Scheduled:
Michelle Bowman 8:45am ET
Austan Goolsbee 12:45pm ET

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