Hot U.S. Inflation Report Drives Stocks and Bonds Lower

Barry Adams
10 Apr, 2024
New York City

 Benchmark indexes on Wall Street turned lower, after consumer price inflation was ahead of market expectations and Treasury yields scaled higher. 

The S&P 500 index declined 1.1% and the Nasdaq Composite decreased 1.2% on the worry that hotter-than-expected inflation will delay the Fed's widely advertised rate cuts. 

Stocks have been struggling in April in anticipation of the inflation report, amid widespread expectations that the continued easing of inflationary forces over the last nine months will extend to March. 

Market indexes have been struggling in April after surging nearly 10% in the first quarter and delivering the best performance in five years. 

 

Consumer Price Inflation Accelerated in March

Consumer price inflation in March accelerated to an annual pace of 3.5% and advanced 0.4% for the month, the U.S. Bureau of Labor Statistics reported Wednesday. 

Annual inflation accelerated for the second month in a row to 3.5% in March, up from 3.2% in February and 3.1% in January. 

Core inflation, which excludes food and energy prices, held steady at 0.4% from the previous month and rose 3.8% from a year ago in March. 

The persistent inflation was driven by a sharp jump in transportation prices of 10.7%, and steady but elevated housing inflation of 5.7%. 

The index for shelter and gasoline contributed to over half of the monthly index for all items. 

 

U.S. Indexes and Yields

The S&P 500 index decreased 1.1% to 5,150.31, and the Nasdaq Composite rose 1.2% to 16,122.60. 

The yield on 2-year Treasury notes edged higher to 4.95%, 10-year Treasury notes inched up to 4.50%, and 30-year Treasury bonds edged up to 4.59%.

WTI crude oil increased $0.55 to $85.75 a barrel, and natural gas prices increased 3 cents to $1.91 a thermal unit.

Gold decreased by $16.59 to $2,338.72 an ounce, and silver fell 5 cents to $27.85. 

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 104.81.

 

U.S. Stock Movers

Delta Air Lines increased 2.8% to $48.65 after the international carrier reported better-than-expected quarterly results. 

Revenue increased 8% to $13.75 billion from $12.76 billion, net income swung to a profit of $37 million from a loss of $363 million, and diluted earnings per share were 6 cents compared to a loss of 57 cents a year ago. 

The airline guided second-quarter revenue to increase between 5% and 7% and earnings per share to fall between $2.20 and $2.50. 

The company also projected 2024 earnings per share to range between $6.0 and $7.0. 

PriceSmart increased by 2.6% to $85.25 after the membership warehouse club operator reported better-than-expected second-quarter results. 

Revenue in the fiscal second quarter ending in February rose 13.1% to $1.29 billion from $1.14 billion, net income rose to $39.3 million from $31.1 million, and diluted earnings per share rose to $1.31 from $1.02 a year ago. 

The company declared a special dividend of $1.0 per share payable on April 30 to shareholders on record on April 19. 

WD-40 decreased 2.8% to $248.0 after the lubricant and specialty oil products maker reported weaker-than-expected quarterly revenue. 

Revenue in the fiscal second quarter ending in February increased 7% to $139.1 million from $130.2 million, net income edged lower to $15.5 million from $16.5 million, and diluted earnings per share eased to $1.14 from $1.21 a year ago. 

NetEase declined 1.4% to 99.23, and Microsoft inched lower 1% to $422.16 after the two companies revived the agreement to distribute computer games in China. 

Microsoft's online gaming unit Blizzard revived the previously available distribution partnership with China-based NetEase, including Overwatch and World of Warcraft. 

Previously, Blizzard had terminated its partnership with NetEase, alleging intellectual copyright violations.