How stocks slump regardless of decreased inflation

US stocks dropped on Wednesday, reversing the increases from Tuesday, amid the March inflation figures revealing a decrease in consumer price growth and Fed minutes revealing that future rate hikes aren’t being discounted.

The S&P 500 fell by 0.41%, while the Dow Jones Industrial Average declined by 0.11%. The technology-heavy Nasdaq Composite fell by 0.85%.

Bond yields fell after the Fed released minutes from its last monetary policy meeting in March. The 10-year yield has fallen to 3.40%, while the yield on a 2-year rate-sensitive bond fell to 3.97% on Wednesday.

The March Federal Reserve minutes revealed a few key findings, such as workers predicting an economic recession later in the year when the central bank raised the interest rates by 0.25%. Officials have expressed concern about problems in the banking sector and have scaled back rate hike forecasts, with some even considering suspending rate hikes.

Today’s data provided a better picture of US inflation. The March consumer price index (CPI) showed price growth slowing over the past month to the slowest growth since May 2021. The consumer price index elevated by 0.1% in March, slower than the 0.4% increase in February. Headline inflation increased to 5.0% yearly in March, below expectations of 5.2%.

Core CPI, which doesn’t include food and energy, rose 5.6%, as expected. Meanwhile, according to BLS data, housing costs are still a key inflation driver, even after stabilizing the housing market.

“Today’s CPI lifts some heat off the Fed for now. Easing price pressures, coupled with signs of a slowdown in the job market, will provide markets with some temporary relief,” wrote Ronald Temple, chief market strategist at Lazard, following the release.

Other stock market analysis

Shares of American Airlines Group Inc. dropped 9% after the aviation giant reported that its first-quarter profits might be lower than anticipated due to elevated expenditures.

Shares of United Airlines Holdings, Inc. also fell more than 5%.

Moreover, Shares of Triton International Limited increased over 30% after Brookfield Infrastructure Partners LP disclosed the acquisition of Triton in a $13.3 billion deal.

Shares of Alibaba Group Holding Limited fell, as did other US-listed Chinses stocks have fallen the most in three weeks.