Stock indexes globally added to declines in choppy trading on Wednesday following the release of minutes from the latest U.S. Federal Reserve meeting, while the 10-year U.S. Treasury yield rose to.
The near-term outlook for inflation continues to suggest a temporary spike, reflecting an adjustment higher in price levels as the global economy recovers from the effects of the pandemic. Indeed, the most recent U.S. consumer price index (CPI) reading for April exceeded even the most bullish of forecasts, with a month on month increase of .
Sectors to watch as inflation fears spook U.S. markets
By Lewis Krauskopf
Reuters
NEW YORK (Reuters) - Worries over inflation are rippling through the U.S. stock market, spooking equities overall while causing investors to consider which shares can hold up better in an environment where inflation may be heating up.
Inflation talk grew on Wednesday as data showed U.S. consumer prices increased by the most in nearly 12 years in April.
Rising prices and costs can crimp consumer demand and corporate profitability. They could also pressure the Fed to tighten monetary policy, which in turn could harm economic growth and stock valuations.
Economists and central bankers have warned about a spike in inflation over and over again since the 2008 global financial crisis, but inflation remained low and investors subsequently numbed to the warnings. Could this time be different? Maybe.
The average inflation rate shrank in each of the prior four decades. It clocked in at 7.4% in the 1970s but declined to a tiny 1.8% in the 2010s. Unprecedented fiscal stimulus didn t lead to meaningfully higher inflation following the 2008 financial crisis, and in 2012, the Federal Reserve established a 2.0% inflation target that it couldn t quite reach. Near-zero interest rates and supportive fiscal policies have, at various points in the preceding decade, led to dire predictions of runaway inflation, but it never happened. No matter the efforts of central banks, inflation remained stubbornly low.