U.S. Stocks Finish Extremely Volatile Session Mostly Lower

With traders reacting to highly anticipated consumer price inflation data as well as the minutes of the latest Federal Reserve meeting, stocks saw substantial volatility over the course of the trading session on Wednesday.

The major showed wild swings back and forth across the unchanged line before eventually closing in negative territory. The Dow edged down 38.29 points or 0.1 percent to 33,646.50, the S&P 500 fell 16.99 points or 0.4 percent to 4,091.95 and the Nasdaq slid 102.54 points or 0.9 percent to 11,929.34.

Stocks initially benefited from a positive reaction to a Labor Department report showing U.S. consumer prices increased by less than expected in the month of March.

The Labor Department said its consumer price index inched up by 0.1 percent in March after climbing by 0.4 percent in February. Economists had expected consumer prices to rise by 0.3 percent.

The report also showed the annual rate of consumer price growth slowed to 5.0 percent in March from 6.0 percent in February.

The year-over-year growth was slower than the 5.2 percent expected by economists and marks the smallest 12-month increase since May 2021.

The report also said core consumer prices, which exclude food and energy prices, rose by 0.4 percent in March after advancing by 0.5 percent in February. The increase matched economist estimates.

The annual rate of growth by core consumer prices accelerated to 5.6 percent in March from 5.5 percent in February, which was also in line with expectations.

Stocks turned lower over the course of the morning, however, as many economists said they still expect the Federal Reserve to raise interest rates by another quarter point early next month.

While buying interest reemerged later in the session, stocks moved back to the downside after the minutes of the latest Fed meeting suggested the recent banking sector turmoil could lead to a recession.

The minutes of the March 21-22 meeting revealed that the staff’s economic projection in light of the banking sector turmoil included a mild recession starting later this year, with a recovery over the subsequent two years.

Sector News

While many of the major sectors showed only modest moves on the day, airline stocks pulled back sharply after Tuesday’s rally, dragging the NYSE Arca Airline Index down by 2.4 percent.

Significant weakness also emerged among semiconductor stocks, as reflected by the 1.8 percent slump by the Philadelphia Semiconductor Index.

Retail stocks also came under pressure over the course of the session, with the Dow Jones U.S. Retail Index falling by 1.6 percent.

Banking and telecom stocks also moved to the downside on the day, while some strength remained visible among pharmaceutical, gold and oil service sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan’s Nikkei 225 Index advanced by 0.6 percent, while China’s Shanghai Composite Index rose by 0.4 percent.

The major European markets also moved to the upside on the day. While the U.K.’s FTSE 100 Index climbed by 0.5 percent, the German DAX Index increased by 0.3 percent and the French CAC 40 Index inched up by 0.1 percent.

In the bond market, treasuries saw substantial volatility before eventually closing modestly higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.3 basis points to 3.421 percent.

Looking Ahead

Trading on Thursday may be impacted by reaction to the latest reports on weekly jobless claims and producer price inflation.

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