Closing Stock Market Summary
The stock market had a weak showing today. Stocks logged sizable declines and Treasuries settled with sharp losses following the hotter than expected March Consumer Price Index (CPI). Total CPI increased 0.4% month-over-month versus an expected 0.3% increase and core-CPI, which excludes food and energy, increased 0.4% month-over-month versus an expected 0.3% increase.
The 10-yr note yield, at 4.35% just before 8:30 ET, climbed 19 basis points from yesterday to 4.56%. The 2-yr note yield, which is most sensitive to changes in the fed funds rate, jumped 22 basis points to 4.97%
The CPI report fueled worries about ongoing hawkishness from the FOMC and drove participants to rethink rate cut expectations. The probability of a rate cut at the June FOMC meeting stands at just 17% now versus 57.4% yesterday, according to the CME FedWatch Tool.
The market's expectations at the start of the year were for six rate cuts by the end of 2024, but the sudden change today leaves the market with only two expected rate cuts now.
Just about everything in the stock market participated in downside moves. The Invesco S&P 500 Equal Weight ETF (RSP) declined 1.7% and ten of the 11 S&P 500 sectors logged losses ranging from 0.2% to 4.1%.
Some influential stocks that have logged huge gains since the start of the year outperformed today, closing with gains. Meta Platforms (META 519.83, +2.93, +0.6%), Amazon.com (AMZN 185.95, +0.28, +0.2%), NVIDIA (NVDA 870.39, +16.85, +2.0%), and Eli Lilly (LLY 761.98, +4.74, +0.6%) were winning standouts in that respect. META is up 46.9% this year, AMZN is up 22.4% in 2024, NVDA sports a 75.8% gain this year, and LLY shows a 30.7% gain on the year.
- S&P 500:+8.2% YTD
- Nasdaq Composite: +7.7% YTD
- S&P Midcap 400: +5.9% YTD
- Dow Jones Industrial Average: +2.1% YTD
- Russell 2000: +0.1% YTD
Reviewing today's economic data:
- Weekly MBA Mortgage Applications Index 0.1%; Last week was -0.6%.
- March CPI 0.4% vs consensus of 0.3%; February was 0.4%
- March Core CPI 0.4% vs consensus of 0.3%; February was 0.4%
- The key takeaway from the report is that the yr/yr reading of headline CPI accelerated for the second consecutive month, which will boost expectations for ongoing hawkishness from FOMC officials, in turn pressuring expectations for a rate cut in June.
- February Wholesale Inventories 0.5% vs consensus of 0.5%; January was 0.3%
Looking ahead, Thursday's economic calendar features:
- 8:30 ET: March PPI (consensus 0.3%; prior 0.3%), Core PPI (consensus 0.2%; prior 0.6%), Weekly Initial Claims (consensus 218,000; prior 221,000), and Continuing Claims (prior 1.791 mln)
- 10:30 ET: Weekly natural gas inventories (prior -37 bcf)