NEW YORK, April 12 (Reuters) – The S&P 500 (.SPX) took a hit on Wednesday, minutes after the Federal Reserve’s March policy meeting. Regional bank liquidity crisis.
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 U.S. stock indexes were last in positive territory, with cyclical sectors leading the blue-chip Dow (.DJI).
“The Fed is a consensus-driven company,” said Zach Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina. “The market is very eager to trade that peak policy Fed behavior — pause and pivot — and the Fed doesn’t communicate that.”
Key indicators were observed as market participants analyzed 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%.
“We saw an improvement in core inflation, people started digging in, and the initial optimism reversed,” Hill added. “The key numbers have seen improvement, but they are above where they should be.”
Earlier in the session, Richmond Fed President Tom Parkin underscored that reality, noting that inflation has a long way to go before it approaches that target.
At last glance, financial markets are pricing in a 71% probability of another 25 basis point interest rate hike at the end of the FOMC’s policy meeting next month, and a 29% probability of a Fed funds target rate of 4.75% to 5.00%. .
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.
At 2:06 pm ET, the Dow Jones Industrial Average (.DJI) was up 172.28 points, or 0.51%, at 33,857.07, while the S&P 500 (.SPX) was up 14.01 points, or 0.34%, at 4,95 and 122.00. IXIC) added 5.68 points or 0.05% to 12,037.56.
Among the S&P 500’s 11 sectors, industrials (.SPLRCI) enjoyed the biggest percentage gain, while consumer staples (.SPLRCS) and consumer discretionary (.SPLRCD) were both in the red.
American Airlines Group Inc ( AAL.O ) fell 9.1% after forecasting lower-than-expected first-quarter profit.
Advancing issues outnumber decliners on the NYSE by a 1.80-to-1 ratio; On the Nasdaq, a 1.04-to-1 ratio favored decliners.
S&P 500 hits 12 new 52-week highs and two new lows; The Nasdaq composite posted 61 new highs and 143 new lows.
Reporting by Stephen Culp; Additional reporting by Sruthi Shankar, Angika Biswas and Richard Chang in Bangalore
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