U.S. stocks rose after a report showed that inflation for March was lower than expected. The Dow Jones Industrial Average climbed 0.5%, while the S&P 500 and NASDAQ Composite both rose 0.5% and 0.3%, respectively. The consumer price index for March increased by 5% year-over-year, compared to expectations of 5.2%. Meanwhile, the core CPI, which excludes fuel and food, rose by 5.6% year-over-year, in line with expectations. Although the cooling of prices was something the Federal Reserve policymakers have been waiting for, it may not be enough to convince them to pause their rate hikes when they next meet in May.
Despite the recent turmoil in the banking sector, with two large bank failures occurring in March, futures traders are still betting that the Fed will raise rates by a quarter of a percentage point next month. Banks are expected to tighten credit, which will also cool the economy, leading some investors to believe that the Fed will soon end its aggressive stance in fighting inflation with rate increases. However, the Fed's meeting minutes from March, which were released later on Tuesday, did not reveal any clear indications about the central bank's next move.
Meanwhile, American Airlines Group (NASDAQ:AAL) shares fell by 7% after the carrier forecasted first-quarter earnings below analyst estimates. Oil prices rose, with Crude Oil WTI Futures up by 1.7% to $82.88 a barrel, and Brent Oil Futures up by 1.7% to $87.08 a barrel. Gold Futures also rose by 0.3% to $2,025.
Overall, the lower-than-expected inflation report for March provided some relief for investors, but the Fed's next move remains uncertain. The recent turmoil in the banking sector and the potential impact on the economy has left some investors questioning whether the Fed will continue its aggressive stance in fighting inflation with rate increases. However, with no clear indications from the Fed's meeting minutes, investors will have to wait to see how the central bank will act in the coming months.
