Inflation Fears and Geopolitical Tensions Weigh on Markets:
Stocks declined last week as investors attempted to navigate conflicting inflation reports. This uncertainty was further complicated by the need to assess the impact of rising geopolitical tensions on the global market.
Inflation Spooks Markets
On Wednesday, the March Consumer Price Index (CPI) report rattled markets, revealing that inflation accelerated slightly more than expected. Bond yields rose, and stocks retreated in response, as investors feared the news could influence the Fed’s rate decision. The 10-year Treasury yield had its highest intraday jump in three years.1,2,3
Markets rallied Thursday as investors were encouraged by the Producer Price Index (PPI) report, which measures inflation at the producer level. Unlike CPI, PPI rose less than expected, which sparked a tech-focused rally. Markets opened lower on Friday as investors wrestled with the conflicting inflation reports.
Fears of an escalating Middle East conflict also weighed on stocks during the week. Concerns about a potential weekend event led some investors to end the week in a risk-off position.4
Source: Charles Schwab & Co., Inc
Inflated Expectations
Minutes from the March Fed meeting, published Wednesday, showed officials’ concern that inflation wasn’t slowing down quickly enough toward the Fed’s 2% target. But despite sticky inflation, they reiterated that rate cuts were still on the table for this year.
The start of Q1 earnings season reinforced inflation concerns as several leading money center banks—despite many beating expectations—forecasted lower growth for the remainder of 2024 due partly to inflation and higher-than-expected rates.
On Friday, the University of Michigan’s survey showed consumer sentiment fell last month. Some concluded that the survey confirmed what consumers have been saying for months—that inflation is still in their everyday lives.5,6
Source: Charles Schwab & Co., Inc
This Week: Key Economic Data
Source: Bloomberg Finance L.P.
This Week: Companies Reporting Earnings
Source: EarningsWhispers
At Concord Asset Management, we design portfolios for the long run, with the ability to navigate various market cycles. However, you can have confidence that we are monitoring these market-moving events, and we will make reasonable, tactical adjustments as necessary.
Author
Gary Aiken
Chief Investment Officer
Concord Asset Management
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Footnotes and Sources
1The Wall Street Journal, April 12, 2024
2CNBC.com, April 10, 2024
3The Wall Street Journal, April 11, 2024
4CNBC.com, April 12, 2024
5MarketWatch.com, April 11, 2024
6CNBC.com, April 10, 2024
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