The price index of personal consumption expenditure (PCE) increased 0.3% in April and the year-on-year increase was 2.7%. The figures reduce the chances of the Fed cutting rates in the short term.
Wall Street erases initial profits and begins to suffer the majority of falls this Friday, after data on inflation in the US that seems to reduce the chances of the Federal Reserve (Fed) cutting interest rates in the short term.
After an upward start to the day, the Nasdaq technology index falls 1.2% and the S&P 500 falls 0.5% compared to the previous day. On the contrary, the Dow Jones continues to register a slight positive variation of 0.1%.
The Bureau of Economic Analysis of the US Department of Commerce announced earlier that the price index of personal consumption expenditure (PCE) increased by 0.3% in April, matching the unrevised increase in March. Also, the year-on-year increase was 2.7%in line with market expectations.
It is worth remembering that the US central bank has an annual inflation target of 2%, which would be reached with monthly variations of around 0.2%. Thus, The figures that have been observed, closer to 3% annually, hinder the relaxation of monetary policy that investors expect.
The economy of the world’s main power remains somewhat more overheated than expected, which led the Fed to maintain rates in the range of 5.25%-5.50%, just like for the last 10 months. However, some data also showed a slowdown in employment and consumption growth.
Financial markets initially expected the first rate cut to occur in March, then it was postponed to June and now to September.
Among the stocks that fell the most this Friday, Ascent Solar (-6.8%), AMD (-2.8%) and Amazon (-2.8%) stand out. At the other extreme, Salesforce leads Dow Jones gains.
Source: Ambito
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