Investing.com — U.S. stock index futures fell sharply Wednesday, after consumer prices grew more than expected in March, raising the possibility of the Federal Reserve delaying cutting interest rates further towards the end of the year.
At 09:00 ET (13:00 GMT), fell 440 points, or 1.1%, slumped 69 points, or 1.3%, and dropped 270 points, or 1.5%.
Strong CPI data set to offer more cues on interest rate cuts
Data released earlier Wednesday showed that the annualized reading of the closely-watched increased by 3.5% last month, a sharp jump from 3.2% notched in February, and more than the 3.4% expected. The year-on-year figure, which strips out volatile items like food and fuel, stayed elevated at 3.8%, considerably above the Fed’s 2% medium-term target..
Fed officials have made easing inflation the major objective of a series of interest rate hikes that have brought borrowing costs up to more than two-decade highs.
They projected, at the last meeting in March, that the central bank would agree to 75 basis points of cuts this year, but have stressed that they first need to see more evidence that price growth is sustainably easing back down to their 2% annualized target.
This inflation reading provides the Fed with little impetus to begin cutting interest rates at time soon, especially after Friday’s red-hot labor report.
Several Fed officials have warned in recent weeks that sticky inflation gives the central bank more headroom to keep rates higher for longer.
Yields on the rate-sensitive 2-year Treasury bond and the benchmark 10-year note, which typically move inversely to prices, climbed Wednesday.
The of the Fed’s March meeting are due out later Wednesday, and are expected to offer more insight into the bank’s plans to cut interest rates this year.
Delta leads off new earnings season
The quarterly earnings season has arrived, with Delta Air Lines (NYSE:) stock rose 3.5% after the carrier offered up an upbeat outlook for the current quarter after its first-quarter earnings topped estimates on buoyant travel demand.
Market darling NVIDIA Corporation (NASDAQ:) slid 1.5%, hitting a one-month low, as cooling hype over artificial intelligence saw traders lock-in profits after a stellar run in the stock.
Wall Street banks JPMorgan Chase & Co (NYSE:), Citigroup Inc (NYSE:) and Wells Fargo & Company (NYSE:) will kick off the earnings season in earnest on Friday.
(Ambar Warrick and Noreen Burke contributed reporting)