The stock market's initial progress on Monday was short-lived as key indicators started to fall, reversing the record highs achieved by the Dow and the S&P 500 last Friday. Currently, all the major indicators are on a downward trend. The Dow Jones is seeing a decrease of 269.78 points or 0.7 percent, placing it at 39,537.59; the S&P 500 dropped by 17.30 points or 0.3 percent to reach 5,237.05; while the Nasdaq lost 16.37 points or 0.1 percent, landing at 16,363.09.
Early gains were largely due to traders finally being able to react to the latest U.S. consumer price inflation data, which met overall expectations. The U.S. Commerce Department reported that yearly consumer price growth saw a slight increase in February; rising to 2.5 percent from January's 2.4 percent, in line with forecasts. The yearly growth of core consumer prices, or those excluding food and energy, slowed to 2.8 percent in February from an adjusted 2.9 percent in January.
Economists had expected the rate of core price growth to remain unchanged from the initially reported 2.8 percent for the previous month. Despite this, traders have been cautious about the pace at which inflation is slowing, sparking uncertainty about whether it is enough to secure the anticipated interest rate cuts by the Federal Reserve.
This caution was exacerbated by an unforeseen increase in U.S. manufacturing activity for March, as reported by the Institute for Supply Management. This saw a knock-on effect as Treasury yields saw a noticeable surge.
On the sector front, telecom stocks suffered significant losses, which saw the NYSE Arca North American Telecom Index fall by 1.7 percent to a five-month intraday low. This followed a data breach statement by AT&T which affected millions of current and former account holders.
Other interest rate-impacted industries such as commercial real estate also suffered, with transportation, housing, and brokerage stocks seeing substantial losses. Gold, computer hardware, and semiconductor stocks, on the other hand, experienced some growth, with Micron Technology seeing a 5.5 percent surge after Bank of America increased its stock price target.
Asian and European stock markets delivered mixed results, mainly due to public holidays. Notably, Japan's Nikkei 255 Index fell by 1.4 percent, while China’s Shanghai Composite Index rose by 1.2 percent. In the bond market, U.S. treasuries took a hit in response to the latest U.S. economic data, causing the yield on the ten-year note to rise by 11.9 basis points to 4.325 percent.
Overall, it was a day of mixed performances and heightened caution in response to the latest economic data and uncertainties surrounding potential Federal Reserve action.
