Stock Market Today: Stocks tumble on hot March inflation report; Treasury yields surge

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U.S. equity futures turned sharply lower Wednesday following a hotter-than-expected March inflation report that has likely trashed the market's forecasts for near-term rate cuts and the longer-term trajectory for consumer price pressures.

Updated at 8:44 AM EDT

New Rate Reality

Fed rate cut bets were slashed in early Wednesday trading after the Commerce Department's March inflation report showed a quickening in both headline and core price pressures that topped Wall Street forecasts. 

The headline rate of 3.5% was well ahead of estimates, as was the 3.8% reading for core prices. The CME Group's FedWatch now suggests just a 28% chance of a June rate cut, down from around 51% from prior to the data release.

U.S. stocks were turned sharply lower following the data release, with futures tied to the S&P 500 indicating an opening bell decline of 75 points while those tied to the Dow suggest a 4365 point slump. The Nasdaq is called 272 points lower.

Benchmark 10-year Treasury note yields surged 14 basis point following the data release to change hands at 4.487% while 2-year notes were pegged at 4.892%, around 10 basis point higher from prior to the data release.

March CPI #inflation +3.5% year/year vs. +3.4% est. & +3.2% in prior month … core +3.8% vs. +3.7% est. & 3.8% prior pic.twitter.com/4JrfqZyZ4B

— Liz Ann Sonders (@LizAnnSonders) April 10, 2024

Stock Market Today

Global markets are laser-focused on the Commerce Department's March inflation report, which is expected to show a modest easing in core price pressures set against a quickening of the headline pace as the economy continues to outperform and energy prices extend their year-to-date gains.

The core CPI rate, which strips out volatile components such as food and energy, is forecast to rise 0.3% from February and accelerate 3.7% for the year.

A faster-than-expected reading could compel markets to push back bets on a June Federal Reserve interest rate cut and challenge the broader assumption of around three reductions between now and the end of the year. 

The Fed will also publish minutes of its March policy meeting at 2 pm Eastern Time in Washington, with investors looking for clues as to how central bank officials see their rate-cut projections evolving over the coming months. 

The CME Group's FedWatch suggests a 50.8% chance of a quarter-point rate cut in June, down from around 64% prior to the Fed's March meeting. 

The Federal Reserve will release minutes of its March policy meeting later today in Washington.

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Treasury bond yields have risen notably over the past three weeks as Fed officials push back on rate-cut bets and employment data continue to suggest a robust labor market and edged lower in overnight dealing amid reports of a massive futures bet on a softer inflation print.

Benchmark 10-year note yields were marked 3 basis points lower heading into the New York trading session at 4.361%, with traders also eyeing $39 billion of new notes to be sold later in the afternoon. 

Related: Inflation report will disappoint markets (and the Fed)

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.07% lower at 104.071.

A handful of stocks were also on the move in premarket trading, with Delta Air Lines  (DAL)  rising 4.4% after the carrier posted stronger-than-expected first-quarter earnings and reiterated its full-year profit forecast. 

Nvidia  (NVDA)  shares, meanwhile, slipped 1.2% after closing at a one-month low of $853.54 last night. A price-target boost from Morgan Stanley, which lifted its target by $205 to $1,000 a share, could support the stock later in the session.

Boeing  ()  shares extended declines, falling 0.2%, after the Federal Aviation Administration said it's investigating whistle-blower allegations of unsafe manufacturing practices at the planemaker 

More Wall Street Analysts:

On Wall Street, stocks are looking at a muted open, but with the market's key volatility gauge, the VIX index, trading near a one-month high at $15.31, and CPI data due at 8:30 am. Eastern Time, big changes before the opening bell are likely.

Futures contracts tied to the S&P 500 suggest a 14 point opening-bell gain, while those linked to the Dow Jones Industrial Average are indicating a 115 point bump. The Nasdaq is called 47 points higher.

Related: JP Morgan CEO Jamie Dimon delivers stark warning on inflation, economy

In overseas markets, the Europewide Stoxx 500 was up 0.54% in early Frankfurt dealing ahead of the April 11 ECB rate decision, while the FTSE 100 added 0.62% in London.

Overnight in Asia, the regionwide MSCI ex-Japan benchmark rose 0.65%. The move up came despite a broad pullback in China stocks linked to a downgrade of the outlook of the country's sovereign credit to negative from stable.

Japan's Nikkei 225, meanwhile, ended 0.48% lower in Tokyo. 

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