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Stocks Turn Lower As Inflation Surges

  • The S&P 500 and the Nasdaq Composite notched their third straight loss on Tuesday. 
  • Headline consumer price inflation in March reached a 41-year high of 8.5% vs. 8.4% estimate.
  • ‘Inflation is too high,’ Federal Reserve Governor Leal Brainard said at a Wall Street Journal summit.

US stocks finished lower Tuesday, relinquishing earlier gains as investors re-focused on headline consumer price inflation that hit a 41-year high and is likely to keep the

Federal Reserve

on track for big interest rate hikes. 

The S&P 500 and the Nasdaq Composite had been higher early Tuesday but ended up logging their third straight losses. Only the energy and utilities sectors rose among the 11 tracked on the S&P 500. 

Stocks had advanced after investors focused on the March reading of core inflation — which strips out volatile food and energy prices. Core prices in March rose 0.3% month-over-month, slower than 0.5% in February and the annual 6.5% rate was just below the 6.6% consensus estimate from Econoday. 

But Federal Reserve Governor Lael Brainard on Tuesday appeared to mainly focus on headline inflation accelerating 8.5% year-over-year, the fastest increase since December 1981. Gas prices soared last month and higher prices for shelter and food also contributed to the rise in headline inflation from 7.9% in February.  

“Inflation is too high,” said Brainard at a Wall Street Journal summit. “Getting inflation down is going to be our most important task,” said  Brainard, considered a dovish voice at the central bank. 

Here’s where US indexes stood at 4:00 p.m. on Tuesday:    

Stocks have suffered this year on expectations that the Fed will jack up interest rates quickly to tame hot inflation, which in turn could stoke a slowdown in the world’s largest economy.

Around the markets, Russian Railways became the first company to officially default in the country, hurt by Western sanctions after Moscow launched a war against Ukraine. Meanwhile, a global credit committee has been asked to rule on Russia’s bond default

“The Big Short” investor Michael Burry warned in a now-deleted tweet late Monday that US stocks are heavily overvalued and poised to slide. 

Oil prices were mixed. West Texas Intermediate crude gained 5.7% to $100.53 per barrel. Brent crude, the international benchmark, turned lower, down 0.2% to $104.46.

Gold rose 1.2% to $1,971.90 per ounce. The 10-year yield fell 7 basis points to 2.71%. 

Bitcoin shed less than 0.1% at $39,481.59.

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