By Sue Chang and Chris Matthews, MarketWatch
Consumer prices rise at the fastest pace in 14 months
U.S. stocks remained mostly higher Wednesday as investors pored
over the minutes from the Federal Reserve's March meeting, which
detailed in depth why the central bank abandoned its effort to
normalize its monetary policy.
How are the benchmarks faring?
The S&P 500 index was up 5 points, or 0.2%, at 2,883, while
the Nasdaq Composite rose 32 points, or 0.4%, to 7,942. The Dow
Jones Industrial Average , however, fell 31 points, or 0.1%, to
26,118.
What's driving the market?
Fed policy makers meeting last month dropped plans for further
rate increases in 2019 due to unease over the U.S. and global
economies
(http://www.marketwatch.com/story/fed-scaled-back-interest-rate-forecast-due-to-unease-about-economy-soft-inflation-fomc-minutes-show-2019-04-10)
and unexpectedly tame inflation, according to the minutes of the
gathering released Wednesday afternoon.
Read:Highlights of the Fed minutes
(http://www.marketwatch.com/story/highlights-of-the-fed-minutes-2019-04-10)
The Fed cited sluggish U.S. growth, a weaker global economy, the
U.K.'s struggles to leave the European Union and ongoing trade
tensions between the Trump administration and China on its list of
worries.
"A majority of participants expected that the evolution of the
economic outlook and risks to the outlook would likely warrant
leaving the target range unchanged for the remainder of the year,"
the minutes said.
Meanwhile, the central bank remained sanguine about
inflation.
Data released Wednesday morning showed consumer prices rose at
the fastest pace in 14 months
(http://www.marketwatch.com/story/higher-gas-prices-boost-cost-of-living-in-march-but-inflation-still-soft-cpi-shows-2019-04-10)
in March, though gains were muted when excluding volatile food and
energy prices.
Investors were also monitoring a planned EU summit, where the
main topic will be Britain's attempt to stage an orderly exit from
Europe's trade bloc. The EU is set to discuss a potential long
extension of the U.K.'s Brexit plans.
(http://www.marketwatch.com/story/brexit-brief-eu-leaders-debate-one-year-delay-to-avoid-no-deal-2019-04-10)
The European Central Bank earlier announced made no changes to
monetary policy, as expected, repeating that it intends to leave
rates at current levels until at least the end of 2019. ECB
President Mario Draghi, in his news conference, said risks to the
eurozone economic outlook remained skewed to the downside and that
policy makers were willing to use all tools at their disposal if
warranted by a deteriorating outlook.
Read:ECB chief Draghi doesn't want to dissuade investors from
thinking dovish thoughts
(http://www.marketwatch.com/story/ecb-chief-draghi-doesnt-want-to-dissuade-investors-from-thinking-dovish-thoughts-2019-04-10)
On Tuesday, the S&P 500 snapped an eight-session win streak
on fears over escalation of trade tensions with the European Union
and a weaker global outlook
(http://www.marketwatch.com/story/china-investment-markets-recovery-should-boost-global-economy-later-in-the-year-imf-says-2019-04-09)
from the International Monetary Fund.
The Trump administration threatened to impose tariffs on $11
billion worth of imports
(http://www.marketwatch.com/story/us-threatens-tariffs-on-european-wine-and-cheese-in-response-to-airbus-subsidies-2019-04-08)
from the European Union, raising the specter of increased global
trade tensions beyond the continuing U.S.-China spat.
What are strategists saying?
"I think there's a bit more inflation beneath the surface than
the market has been acknowledging," Willie Delwiche, investment
strategist with R.W. Baird, told MarketWatch. "The Fed is trying to
be transparent and say 'we're going to be on hold right now and we
are going to give what we've done over the past two years time to
settle and see what happens. The market seems to think that if you
are tilting toward a 'wait and see policy' you are actually
preparing for rate cuts this year."
"In the past, the Fed has used minutes to clarify confusion over
what it said" following the most recent meeting, Delwiche added,
arguing that the Fed minutes could provide more clarity as to how
the Fed is interpreting the latest data.
"The stronger 0.4% month on month rise in headline consumer
prices, which drove the annual inflation rate back up to 1.9%, from
1.5%, was mainly due to the continued rebound in gasoline prices,"
wrote Andrew Hunter, senior U.S. economist at Capital Economics, in
a note.
"The further decline in core CPI inflation to a 13-month low of
2% in March, from 2.1%, underlines that there is little chance of
inflation breaking out above the Fed's target any time soon," he
added. "We continue to expect that weaker activity growth will
convince officials to start cutting interest rates before the end
of the year."
What stocks are in focus?
Ride-sharing company Lyft Inc. shares sank 7.5% as investors
focused on Uber Inc.'s plans for its own initial public offering.
The stock has fallen more than 19% since Lyft's March 28 IPO.
Uber is set to kick off its IPO market campaign, selling $10
billion in stock, according to a number of reports
(http://www.marketwatch.com/story/uber-looks-to-raise-about-10-billion-in-ipo-seeks-valuation-of-up-to-100-billion--reports-2019-04-10).
That public debut is slated to take place as early as May on the
New York Stock Exchange, according to reports.
Shares of Boeing Co.(BA) fell 1% after Intelsat SA(I)said it
lost communication
(http://www.marketwatch.com/story/intelsat-lost-communication-with-boeing-made-satellite-2019-04-10)
with its Intelsat 29e satellite, made by Boeing.
Apple Inc.(AAPL) shares edged up 0.1% after HSBC downgraded
shares to reduce from hold
(http://www.marketwatch.com/story/apple-shares-fall-1-premarket-after-hsbc-downgrades-to-equivalent-of-sell-2019-04-10).
Shares of Levi Strauss & Co. rose 5.4% after the apparel
designer reported
(http://www.marketwatch.com/story/levi-strauss-post-ipo-earnings-send-shares-higher-2019-04-09)
late Tuesday its first quarterly results since its March initial
public offering.
JetBlue Airways Corp. (JBLU) shares advanced 2.6% after the
airliner reported a nearly 8% increase
(http://www.marketwatch.com/story/jetblue-march-traffic-climbs-79-2019-04-10)
in traffic for March, though it said it expects
revenue-per-available-seat mile to fall 3.1% in the first
quarter.
Shares of Delta Air Lines Inc. (DAL) rose 1.6% after the air
carrier reported first-quarter profit and revenue that surpassed
Wall Street expectations while issuing an upbeat outlook.
How are other markets trading?
Stocks in Asia closed mostly lower
(http://www.marketwatch.com/story/asia-stocks-pull-back-early-wednesday-on-the-heels-of-us-market-declines-2019-04-09),
with Japan's Nikkei 225 retreating 0.5%, Hong Kong's Hang Seng
Index losing 0.1%, while China's Shanghai Composite Index added
0.1%.
European stocks closed on a mixed note
(http://www.marketwatch.com/story/europe-markets-inch-higher-on-eu-china-trade-optimism-2019-04-10)
as the Stoxx Europe 600 rose 0.3%.
In commodities markets, the price of oil extended gains
(http://www.marketwatch.com/story/oil-prices-firm-back-to-near-5-month-highs-ahead-of-opec-us-inventory-updates-2019-04-10)
and gold futures traded higher. The U.S. dollar , meanwhile,
retreated against its peers
(http://www.marketwatch.com/story/euro-steady-ahead-of-ecb-decision-eu-summit-2019-04-10).
--Mark DeCambre contributed to this report
(END) Dow Jones Newswires
April 10, 2019 14:29 ET (18:29 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.