US interest rates held again after three months of disappointing inflation data

Stock Markets Rally Amid Investor Hopes for Interest Rate Cuts in 2024

Stock Markets Rally , Amid Investor Hopes for , Interest Rate Cuts in 2024. On the morning of May 15, both the S&P and the Nasdaq hit all-time highs after new data suggested inflation may be easing in line with expectations. Quartz reports that the Dow Jones Industrial Average is also inching toward the record-breaking 40,000 mark, which it almost hit in March. . According to the latest Bureau of Labor Statistics data, April saw the Consumer Price Index, a key gauge of inflation, rise by 3.4%. At the same time, consumer prices increased by 0.3%, slowing slightly from March's 0.4% increase. The latest data also shows that core prices, which don't include food and energy, saw the lowest increase since April of 2021, rising just 3.6%. . As a result, investors have a sense of renewed hope that the Federal Reserve will begin to cut interest rates at some point in 2024. The latest inflation data was released one day after the Producer Price Index, which measures wholesale inflation, increased 0.5%. . Over the past year, the index has increased 2.2%. Shortly after markets opened, the Dow jumped up 147 points, hitting 39,705, while the S&P 500 and the Nasdaq saw 0.5% increases. Shares in GameStop were down 30% after experiencing a boost earlier this week by the online return of investor "Roaring Kitten."

Consumer Outlook Plunges Amid Fears of More Price Hikes Ahead

Consumer Outlook , Plunges Amid Fears of , More Price Hikes Ahead. CNN reports that sentiment about the economy among consumers in the United States has plummeted to the lowest level in the past six months. According to the latest consumer survey by the University of Michigan, consumers are also bracing for more price increases in the year ahead. . The consumer expectations gauge, which is closely monitored by the White House, dropped 13%, representing the most significant single month decline since mid-2021. The latest news is still better than last May when inflation was at 4% compared to the current 3.5% reading. However, CNN points out that despite inflation being lower than the same time last year, the numbers have been moving in the wrong direction. The trajectory has shifted economist expectations for the Federal Reserve to cut rates. . The latest Fed report saw expectations for year-ahead inflation increase to 3.5% from the 3.2% forecast in April. . At the same time, long-run expectations for inflation also increased to 3.1% from April's 3.0%. . According to Chicago Federal Reserve President Austan Goolsbee, the latest data , "bodes awful for progress on inflation.". There isn’t, at this time, much evidence in my view that inflation is stalling out at 3%, Austan Goolsbee, Chicago Federal Reserve President, via CNN

Key Federal Reserve Inflation Gauge Rose 2.8% in March

Key Federal Reserve Inflation Gauge , Rose 2.8% in March. According to Commerce Department data released on April 26. the personal consumption expenditures (PCE) price index, not including food or energy, rose 2.8% year-over-year in March. . That exceeded Dow Jones estimates of 2.7%, CNBC reports. . When also accounting for food and energy, the all-items PCE measure rose 2.7%, which was above the 2.6% estimate. Inflation reports released this morning were not as a hot as feared, , George Mateyo, chief investment officer at Key Wealth, via CNBC. ... but investors should not get overly anchored to the idea that inflation has been completely cured and the Fed will be cutting interest rates in the near-term, George Mateyo, chief investment officer at Key Wealth, via CNBC. The prospects of rate cuts remain, but they are not assured, and the Fed will likely need weakness in the labor market before they have the confidence to cut, George Mateyo, chief investment officer at Key Wealth, via CNBC. Consumers continue to spend despite higher prices, CNBC reports. Personal spending increased 0.8% in March, while personal income rose 0.5%. The personal saving rate dropped to 3.2% as more people are having to dip into their savings to cover the cost of living. The Fed continues to target 2% inflation, which the core PCE has exceeded for the last three years, CNBC reports.

Fears of Potential Iranian Attack Drive US Stocks Down Nearly 500 Points

Fears of Potential Iranian Attack , Drive US Stocks Down , Nearly 500 Points. CNN reports that United States stocks dropped on April 12 amid rising tensions in the Middle East pushing traders to seek safe havens like gold and bonds. CNN reports that United States stocks dropped on April 12 amid rising tensions in the Middle East pushing traders to seek safe havens like gold and bonds. By mid-afternoon, the Dow had fallen 1.4%, the S&P 500 went down 1.6%, and the Nasdaq dropped 1.8%. The dip came after the White House announced that both the U.S. and Israel are on alert for a potential attack by Iran or its allies. The dip came after the White House announced that both the U.S. and Israel are on alert for a potential attack by Iran or its allies. The warning comes after Iran accused Israel of a deadly airstrike on a consulate in Damascus, Syria. . The news also sent oil prices up amid fears of regional tensions escalating as a result of the ongoing war in Gaza. . The news also sent oil prices up amid fears of regional tensions escalating as a result of the ongoing war in Gaza. . Brent crude futures jumped up to $90.42 a barrel, and West Texas Intermediate crude futures increased to $86.65 a barrel. Those geopolitical concerns and subsequent rising oil prices sent investors to safe havens like gold futures, which rose to $2,379 a troy ounce. Those geopolitical concerns and subsequent rising oil prices sent investors to safe havens like gold futures, which rose to $2,379 a troy ounce. CNN reports that Americans' opinions of the economy have dipped in the past few months amid persistently high inflation. The geopolitical fears come as investors are already contending with concerns that the Federal Reserve could wait to bring interest rates down from a 23-year high. Officials at the Fed have signaled that further rate hikes could still be on the way if the central bank's efforts to fight inflation stall.

Federal Reserve Posts Massive $114 Billion Loss in 2023

Federal Reserve Posts Massive, $114 Billion , Loss in 2023. On March 26, the Federal Reserve announced a record-breaking net negative income of $114.3 billion in 2023. Reuters reports that the loss follows $58.8 billion in net income in 2022. . Since releasing the numbers, the Fed has stressed that negative net income does not impede its ability to operate. Since releasing the numbers, the Fed has stressed that negative net income does not impede its ability to operate. As a result of low rates and large levels of bond holdings, the Fed has earned significant profits in recent years. Last year, the Fed's audited interest expenses for banks' reserve balances reached $176.8 billion, an increase of over $116 billion from 2022. In 2023, the Fed's interest payouts from its reverse repo facility were $104.33 billion, increased from $41.9 billion the year before. Reuters reports that the Fed creates funds when dealing with operating losses, capturing its loss in an accounting device known as a deferred asset. Reuters reports that the Fed creates funds when dealing with operating losses, capturing its loss in an accounting device known as a deferred asset. At the close of 2023, the deferred asset stood at $133.3 billion. As of March 20 of this year, that number had risen to $157.8 billion with no indication of how much larger it could get. Last year, a St. Louis Fed report forecast that it could take years before the Fed can return to profitability and reduce the country's deferred asset. Last year, a St. Louis Fed report forecast that it could take years before the Fed can return to profitability and reduce the country's deferred asset