'This Is a Time When Economic Resilience Will Be Tested'

Markets pull back after report on inflation
By Newser Editors and Wire Services
Posted Apr 12, 2022 3:41 PM CDT
Stocks Give Up Gains After Inflation Report
Gasoline prices are displayed at a gas station in Marietta, Ga. on Friday, April 8, 2022.   (AP Photo/Mike Stewart)

(Newser) – Stock indexes edged lower on Wall Street Tuesday, shedding early gains as investors weigh new data on inflation. The pullback follows back-to-back losses driven by worries about the economic collateral damage as the Federal Reserve tackles high inflation more aggressively. A report showed inflation is still at its highest level in 40 years. Still, a faint silver lining was that inflation unexpectedly slowed in March on a month-over-month basis, after excluding the costs of food and fuel, the AP reports. The S&P 500 fell 15.08 points, or 0.3%, to 4,397.45. The Dow Jones Industrial Average fell 87.72 points, or 0.3%, to 34,220.36. The Nasdaq fell 40.38 points, or 0.3%, to 13,371.57.

While it’s laughable to ask households to forget soaring prices at the gasoline pump and the grocery store, the Federal Reserve pays more attention to what’s called "core inflation" while setting policy because it’s less volatile. And core inflation on a month-over-month basis moderated to its slowest level since September. "Hopefully this is as bad as it gets," says Brian Jacobsen, senior investment strategist at Allspring Global Investments. "The risk is that a red hot labor market grows cold under the force of those higher food, fuel, and financing costs. This is a time when economic resilience will be tested."

On Tuesday, technology stocks were among the biggest drags on S&P 500. Microsoft fell 1.1% and chipmaker Nvidia fell 1.9%. Losses in health care and financial stocks also weighed down the index. The price of US crude oil climbed 6.7% to settle at $100.60, keeping the pressure on high inflation. Brent crude, the international standard, rose 6.3% to settle at $104.64. More swings may be in store for stocks as companies prepare to report their earnings for the first three months of the year. Delta Air Lines, JPMorgan Chase, and other big-name companies will kick off the reporting season on Wednesday.

(Read more stock market stories.)

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