Dow Jones Industrial Average extends losses on sticky US inflation

NEW YORK (April 10) Equity markets are taking a blow on Wednesday as an unexpectedly strong US inflation report has hammered hopes that the Federal Reserve (Fed) may start lowering borrowing costs in the near term.

US Consumer Prices Index (CPI) accelerated at a 0.4% pace in March, against expectations of a slowdown to 0.3%, while the yearly rate increased to 3.5% from 3.2% in the previous month. These numbers confirm that price pressures remain stubbornly high and ditch the market’s roadmap of three rate cuts in 2024, starting in June. Later on Wednesday the minutes of the Fed's latest meeting reflect decreasing confidence among policymakers that inflation is trending sustainably towards the 2% target.

The risk-averse reaction to CPI data has sent the main US indices tumbling. The Dow Jones leads losses, down 1.210% to 38,455, increasing its distance from March highs near 40,000. The S&P 500 and the NASDAQ index drop 0.9% each to 5,162 and 16,162, respectively.

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Almost all the Wall Street sectors are posting losses on Wednesday. Real Estate is the most affected by higher-for-longer interest rates and falls 4.24%, followed by Utilities, down 1.7%, and Materials, which gives away 1.5%. Only the Energy sector is trading above opening levels with a 0.5% advance.

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