Day Traders Diary

4/10/24

The major averages took a hit after the March inflation data came in hotter than expected, pushing interest rates higher and moving any rate cuts further down the road. The Dow Jones Industrial Average fell 422 points, or 1%. The S&P 500 fell 49 points or 0.95% while the Nasdaq Composite fell 136 points or 0.84%. The small-cap benchmark Russell 2000 dropped 2.5%.

The CPI in March rose 0.4% for the month and 3.5% year-over-year, versus estimates of a 0.3% monthly increase and 3.4% year over year, according to economists polled by Dow Jones. Core CPI, which excludes volatile food and energy prices, accelerated 0.4% from the previous month while rising 3.8% from a year ago, compared to estimates for 0.3% and 3.7%, respectively. CPI in April increased at a 3.2% annual pace for all items.

The 10-year Treasury yield, a benchmark for mortgage and other loans, is back above 4.5%, closing up 18 basis points at 4.54%. The 2-year Treasury yield spiked to nearly 5% to 4.96%.

Fed funds futures trading data now suggests just a 20.6% likelihood that the Fed will lower rates at its June meeting, according to the CME FedWatch Tool. Traders are now betting that the first rate cut will likely take place at the central bank's meeting in September.

Except for energy, all sectors in the broad market index were in the red for the day. Real estate fell more than 3%, leading sector losses for the day. The S&P 500 had been treading water in April after a great start to the year.