CPI Reactions: S&P 500 Eyes Bull Market, Dollar Sinks, Treasuries And Gold Climb As Markets Embrace Potential Fed Pause

Zinger Key Points
  • Stocks positively reacted after CPI slowed in April.
  • Dollar fell, pushing gold higher. Treasuries gained as markets bet on a Fed pause in June.

Market risk appetite soared on Wednesday, with the U.S. dollar plunging while gold, stocks, and bonds rallied after the latest inflation report for April boosted the odds that the Fed will keep interest rates unchanged in June.

The annual U.S. CPI inflation rate came in at 4.9% in April, slightly lower than economists' 5% expected and down from 5% in March, the Bureau of Labor Statistics reported Wednesday. The underlying measure of inflation, which excludes food and energy goods from the basket, eased to 5.5% last month, slightly down from the 5.6% seen in March. 

Investors have further trimmed their already slim bets on a Fed hike in June, and currently assign an 87% likelihood of the rate remaining unchanged, according to the CME Group's FedWatch Tool. 

Market Reactions:

  • The S&P 500 index, which is tracked by the SPDR S&P 500 ETF Trust SPY, rose 0.9% after the CPI was released, and is currently up 19.2% since the October 2022 lows, nearing the bull-market threshold. 

Chart: S&P 500 Rose After CPI 

  • The dollar weakened, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, down 0.4%. 

Chart: US Dollar Weakened Post CPI

  • Gold prices, which are tracked by the SPDR Gold Trust GLD, rose 0.6%, slightly retracing after hitting an intraday high at $2,050/oz.

Chart: Gold Gained After CPI

  • Bonds reacted positively after the inflation release, with the iShares U.S. Treasury Bond ETF GOVT rising 0.4%, as yields fell across all maturities. 
  • Chart: Treasuries Rallied As CPI Cemented Fed Rate Hold Bets In June

Best-Performing Stocks For The Day

Among mega caps, the best performers for the day were: 

  • Advanced Micro Devices, Inc. AMD, up 2.2%
  • Amazon, Inc. AMZN, up 2%
  • Adobe, Inc. ADBE, up 1.9%
  • Tesla, Inc. TSLA, up 1.6%.

Now Read: Jim Cramer Eats His Words On Palantir: Not A 'Real Company' A Month Ago, Now He's High On Profitability, Says Russia Should 'Look Out'

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Posted In: Macro Economic EventsBondsBroad U.S. Equity ETFsSpecialty ETFsCurrency ETFsForexEconomicsHotIntraday UpdateMarketsETFsCPIInflationInterest Ratesmarket reaction
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