Stubborn Inflation Hurts Stock Market Sentiment

The stock market closed low on Wednesday after the FOMC meeting minutes were released.

Those minutes showed tough inflation numbers, indicating a stalled economy where inflation is decreasing at slower than expected rates. The stock market took a hit as a result, with the Dow Jones losing 201 points and falling 51% as a result.

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The S&P 500 is down as well, closing at a loss of 0.27% compared to the previous day. The Nasdaq Composite rounded out the top three with a drop of 0.18%.

The poor stock market sentiment was powered by negative inflation data from the Federal Reserve on Wednesday. The press conference held by Federal Reserve Chairman Jerome Powell reiterated what the FOMC members had been saying all day.

Worse Than Expected Numbers

The inflation risk is still high for the stock market and the economy, according to the FOMC meeting data. The Fed has been targeting a 2% inflation rate, but inflation is still stuck at 3.4%. That is a decrease from the previous month, but not by much, and the Fed hoped that inflation would have eased more by this point.

The Fed is holding off on interest rate cuts for now as indicators point to prices increasing rather than decreasing for now. Inflation has slowed in 2024, but the Committee has not seen the progress they had anticipated and hoped for. Price inflation is up significantly for both goods and services, according to the Committee’s summary.

Several members are wanting to tighten policy further, but only if inflation indicators are pointing toward that action being necessary. Jerome Powell and Governor Christopher Waller said that they do not think a hike will be coming soon.

Interest rates will be held for now at 5.25%-5.5% for now, after a unanimous vote from the FOMC. That is an incredibly high rate for interest, as high as it has been in 23 years. The rates have been locked in there since July 2023.

Stocks may stay negative for the short term as a result of this new inflation data. 


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Timothy St. John
Timothy St. John
Financial Writer - European & US Desks
Timothy St John is a seasoned financial analyst and writer, catering to the dynamic landscapes of the US and European markets. Boasting over a decade of extensive freelance writing experience, he has made significant contributions to reputable platforms such as Yahoo!Finance, Expert Business Advice, Tips, and Resources -, and numerous others. Timothy's expertise lies in in-depth research and comprehensive coverage of stock and cryptocurrency movements, coupled with a keen understanding of the economic factors influencing currency dynamics. Timothy majored in English at East Tennessee State University, and you can find him on LinkedIn.
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