US stocks trade mixed after April inflation cools by less than anticipated

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US national average gas prices have been above $4 a gallon since March.Al Seib/Los Angeles Times/Getty Images

  • Stocks dropped Wednesday following the April inflation report.

  • Headline inflation of 8.3% was above a Bloomberg consensus estimate of 8.1%.

  • Core consumer prices rose 0.6%, more than the 0.4% estimate.

Stocks dropped Wednesday after the US government said headline inflation eased in April but was still hotter than expectations.

Stock futures swung sharply lower after the Bureau of Labor Statistics said the Consumer Price Index climbed 8.3% in the year through April. Economists surveyed by Bloomberg expected the gauge to rise by 8.1%. The reading was slower than the 8.5% rate in March that marked a 41-year high.

The S&P 500 was headed for its fourth loss in five sessions. April core consumer prices, which strips out volatile food and energy prices, rose 0.6% month over month, higher than the consensus estimate of 0.4%. The 10-year yield was up 4 basis points to 3.04% after the report.

“The month-on-month CPI number is really a blowout number which no one expected and this has crushed the confidence among traders now,” said Naeem Aslam, chief market analyst at AvaTrade, in a note.

Here’s where US indexes stood at 9:30 a.m. on Wednesday:

Stocks have slumped this year in large part because of expectations for the Federal Reserve to aggressively raise interest rates to bring down inflation – stoking concerns that a fast pickup in borrowing costs will pull the world’s largest economy into a recession. The Fed has raised interest rates by 75 basis points since March to a range of 0.75% to 1%.

“April data will not likely change expectations that the Federal Open Market Committee will hike by 50 basis points at their next meeting on June 14-15,” Jeffrey Roach, chief economist at LPL Financial said in a note. “Investors and policy makers both know inflation will likely stay above target for a while but both will focus on the direction of the change.”

The “reality is that now we need some serious measures to cool inflation otherwise stagflation is here,” said Aslam.

Around the markets, Coinbase tumbled after the stocks and crypto trading platform missed analyst estimates with its first-quarter results.

Algorithmic stablecoin TerraUSD slid as low as $0.30 as traders warned of a “death spiral” in an asset that’s set up to be pegged to the dollar.

Oil prices climbed. West Texas Intermediate crude gained 3.4% to $103.10 per barrel. Brent crude, the international benchmark, gained 3.1% to $105.63.

Gold slipped 0.1% to $1,838.70 per ounce. The 10-year yield rose 4 basis points to 3.04%.

Bitcoin fell 4.8% to $29,461.40.

Read the original article on Business Insider

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