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Wall Street Falls Amid Recession Concerns Despite Cooler-Than-Expected Inflation Data


Stocks on Wall Street declined on Wednesday, despite the release of cooler-than-expected inflation data, due to concerns about a potential recession. The Dow Jones Industrial Average fell by 0.11%, while the S&P 500 and Nasdaq Composite dropped 0.41% and 0.85%, respectively. This came after the Federal Reserve’s March policy meeting minutes showed officials feared a mild recession later this year after the U.S. banking crisis.

Meanwhile, the March consumer price index rose by only 0.1%, compared to the expected 0.2%, suggesting that inflation is beginning to slow. However, the core CPI, which excludes food and energy, rose as anticipated. As companies such as JPMorgan Chase, Wells Fargo, Citigroup, and UnitedHealth begin reporting first-quarter earnings later in the week, the health of the U.S. economy and consumers will be further tested.

data by Bloomberg

On Wednesday, all sectors in the stock market declined by 0.41%, except for Industrials which increased by 0.33%, Energy which increased by 0.11%, and Materials which increased by 0.07%. Health Care increased by only 0.02%, while Utilities decreased by 0.12%, Financials by 0.20%, Real Estate by 0.30%, Consumer Staples by 0.45%, Information Technology by 0.61%, and Communication Services by 0.89%. Consumer Discretionary saw the largest decline, falling by 1.54%.

Major Pair Movement

Data taken from MT4 VT Markets

On Wednesday, the dollar index fell by around 0.6% after the March U.S. CPI came in slightly lower than expected. However, the losses were somewhat contained after Fed speakers reminded the markets that they could still tighten further if core inflation does not proceed sustainably toward their target. The minutes from the Fed’s March meeting showed concern regarding the banking crisis, but inflation remained a top priority.

The EUR/USD rose by 0.74%, nearing February’s one-year highs at 1.1034, as the ECB is expected to hike rates by at least 75bp into year-end, compared to the Fed, which is not fully priced to hike 25bp in May before roughly 50bp of cuts by December. Sterling also rose by 0.5%, nearing April’s 10-month highs at 1.2525, and could continue to climb if upcoming U.S. data favor a more cautious Fed. The USD/JPY fell by 0.42%, but it now needs hawkish U.S. data to get a bullish close above the pivotal 133.77 level.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
AUDEmployment Change09:3020.8K
AUDUnemployment Rate09:303.60%
GBPGross Domestic Product (Mar)14:000.10%
USDCore Producer Price Index (Mar)20:300.20%
USDProducer Price Index (Mar)20:300.00%
USDUnemployment Claims20:30233K
CADBOC Gov Macklem Speaks21:00