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Stocks Plummets; Bank of Canada’s Interest Rates Steady

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Wednesday’s trading on Wall Street was a rollercoaster ride with stocks first soaring, only to later take a sharp dive. Markets were thrown into turmoil with the release of inflation data showing that the rate of consumer price increase had slowed down in March. 

On the other hand, things took another turn for the worse when it was revealed that the Fed is not ruling out future rate hikes. . 

The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all plunged, leaving investors on edge. The day’s closing saw a 0.41% drop in the S&P 500, a 0.11% decline in the Dow, and an 0.85% dip in the tech-heavy Nasdaq Composite.

The curtain was drawn on the Federal Reserve’s March policy meeting, and the drama continued. Bond yields danced to the beat of the Federal Reserve’s drum, tickling down after the release of the Fed minutes. 

The 10-year note saw a dip in its yield, while two-year note yields succumbed to the pressure in a rate-sensitive move. It was a symphony of intrigue and financial finesse, with investors eagerly awaiting the next act.

The Federal Reserve’s March meeting was quite eventful – apart from the decision to raise rates, the minutes reveal that there were some major concerns plaguing the central bank. 

The economy, for one, seemed to be headed towards recession, and the banking sector was in dire trouble. As a result, officials had to re-think their expectations for rate hikes, with some even suggesting the possibility of a pause.

It’s clear that the Fed is keeping a watchful eye on the state of the economy, and is prepared to take action if needed.

It seems like the inflation situation in the United States may not be as dire as previously thought. Recent data reveals that the consumer price index rose at a slower pace of 0.1% in March, providing some relief after February’s 0.4% gain. 

Even better news is that the headline inflation rate rose at an annual clip of 5.0%, below expectations of 5.2%. This could suggest that we may see some easing of price hikes in the near future.

The recent inflation figures showed that even with food and energy stripped out, Core CPI grew 5.6% as expected. However, it seems that housing costs are not taking a backseat in driving inflation, even as the residential market shows signs of stabilizing, according to data from the BLS. 

So while we may be saving on groceries and gas, our housing expenses may be causing us to feel the pinch.

The Federal Reserve can breathe a little easier today, as the latest Consumer Price Index report brings some relief. With inflationary pressures starting to ease up and fewer signs of job market growth, the markets can take a much-needed break from the recent frenzy.

Despite recent positive developments, there’s still more work to be done for the Fed to declare victory over inflation. While core inflation is still far above their target, there’s a bumpy path ahead to get it to 2%. In fact, it’s likely that we’ll end the year with core CPI above 3%. So while things are on the right track, the Fed isn’t out of the woods just yet.

Yesterday’s release of the CPI report left investors wondering whether the Federal Reserve will opt for yet another rate hike in May. The market is currently pricing in a 69% chance of this happening, although this figure dipped slightly after the report was published. Analysts are now eagerly awaiting signs as to whether the Fed will continue down this route or take a different tack altogether.

BOC Fails To Raise Or Reduce Rates

The Bank of Canada has decided to keep interest rates the same for the second meeting in a row, explaining that recent data suggests a decrease in inflation. On the other hand, American Airlines Group Inc. is facing difficulties with higher costs which caused their shares to plummet by 9%. Additionally, shares of United Airlines Holdings, Inc. have also fallen by over 5%.

Investors saw a mixed bag of results in the stock market today. Shopify made big gains thanks to an upgrade from JMP Securities, while Triton enjoyed a significant surge after being acquired by Brookfield Infrastructure Partners.

However, it wasn’t all good news for Chinese e-commerce giant Alibaba, as their shares fell alongside other U.S.-listed Chinese stocks. It just goes to show that the stock market can be unpredictable and prone to both ups and downs.

30-year Mortgage Rate Falls

In a pleasant twist for potential homebuyers, the US 30-year mortgage rate has hit a delightful two-month low for the fifth week in a row, easing financial stress for those looking to invest in their dream home.

The latest data from the Mortgage Bankers Association indicates a dip in contract rates, with a 10 basis point drop to 6.3%, while the index for mortgage applications increased by 7.8%. This news comes in the midst of falling mortgage rates, as investors flock to Treasury bonds in the wake of bank collapses. 

Despite this, high borrowing costs and a lack of housing inventory have continued to stunt home buying activity, posing challenges for eager buyers.

Todays Updates

Up on today’s agenda are two important reports that can affect the currency market. Let’s start with the US Core PPI which measures the price change of goods and services sold by producers, without food and energy. 

A higher ‘Actual’ than ‘Forecast’ will be great news for the currency market. But wait, there’s more! We’ll also be getting the Unemployment claims report from the Department of Labor, giving us an insight into how many people have filed for unemployment insurance for the first time in the past week. If the ‘Actual’ is lower than the ‘Forecast’ for this metric, it’s even better for the currency. Get your trading game on for today!

Stay on top of the latest happenings in the trading world with TraderFactor’s Economic Calendar. From market updates to catch up sessions, we’ve got you covered with all the information you need to make informed decisions.

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  • Phyllis Wangui

    Phyllis Wangui is a Financial Analyst and News Editor with qualifications in accounting and economics. She has over 20 years of banking and accounting experience, during which she has gained extensive knowledge of the forex, stock news, stock market, forex analysis, cryptos and foreign exchange industries. Phyllis is an avid commentator on these topics and loves to share her insights with others through financial publications and social media platforms.

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