Wall Street closed lower after the Fed’s meeting minutes and inflation data

NEW YORK (Reuters) – U.S. stocks closed lower on Wednesday after minutes from the Federal Reserve’s March policy meeting revealed several Federal Open Market Committee (FOMC) members’ concerns about regional banks’ liquidity crunch.

The minutes came on the heels of a lower-than-expected inflation report that belied steadier fundamental data and boosted the prospect of another rate hike when the Fed meets next month.

All three major US stock indices swung throughout the session, closing in negative territory.

“The minutes were clear that there is continued concern from the Fed with regard to the banking crisis as well as the price hike,” said Greg Pasuk, CEO of AXS Investments in New York.

Indicators began to turn as market participants analyzed the Labor Department’s Consumer Price Index (CPI).

The report, on the prices urban consumers pay for a basket of goods and services, came in below analysts’ expectations, indicating that the Fed’s efforts to tame inflation are in effect.

However, the core CPI — which excludes volatile food and energy — hit the consensus bull’s-eye, and is still well above the Fed’s 2% average annual rate target.

“This week marks an inflection point as investors look for a more certain basis ahead of corporate earnings and the Producer Price Index (PPI) report due out tomorrow,” Pasuk said.

“The (economic) data has been very mixed, so investors are exaggerating any positive or negative hint of Fed rate hike policy. Volatility will continue, and investors will have to buckle up. Main Street.”

At last glance, financial markets have priced in a 70% possibility of another 25 basis point rate hike at the close of next month’s FOMC policy meeting.

The next catalyst to move the market is likely to be the first-quarter earnings season, which begins Friday with results from three major banks – Citigroup Inc (CN), JPMorgan Chase & Co (JPM.N) and Wells Fargo & Co (WFC). .n).

Analysts now expect the S&P 500’s overall first-quarter earnings to decline 5.2% year-over-year, a stark reversal from the 1.4% annual growth seen at the start of the quarter.

According to preliminary data, the Standard & Poor’s 500 Index (.SPX) lost 16.66 points, or 0.40%, to close at 4,092.28 points, while the Nasdaq Composite Index (.IXIC) lost 100.75 points, or 0.84%, to 11,931.13 points. The Dow Jones Industrial Average fell 32.16 points, or 0.10%, to 33,652.63.

American Airlines Group Inc (AAL.O) fell after it forecast lower-than-expected first-quarter profits.

Reporting by Stephen Kolb. Additional reporting by Sruthi Shankar and Anika Biswas in Bengaluru and Richard Chang

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