Markets wobble on inflation news

Inflation dips a little from four-decade high

Inflation eased slightly in April after months of relentless increases but remained near a four-decade high, making it hard for millions of American households to keep up with surging prices.

Consumer prices jumped 8.3% last month from a year ago, the government said Wednesday. That was below the 8.5% year-over-year surge in March, which was the highest since 1981. On a monthly basis, prices rose 0.3% from March to April, the smallest rise in eight months.

Still, Wednesday’s report contained some cautionary signs that inflation may be becoming more entrenched. Excluding the volatile food and energy categories, so-called core prices jumped twice as much from March to April as they did the previous month. The increases were fueled by spiking prices for airline tickets, hotel rooms and new cars. Apartment rental costs also kept rising.

Those price jumps “make clear that there is still a long way to go before inflation returns to more acceptable levels,” said Eric Winograd, U.S. economist at asset manager AB.

Even if it moderates, inflation will likely remain high well into 2023, economists say, leaving many Americans burdened by price increases that have outpaced pay raises. Especially hurt are lower-income and Black and Hispanic families, who on average spend a greater proportion of their incomes on gas, food and rent.

Wednesday’s report also underscored the challenges for the Federal Reserve and White House in their struggles to tame inflation.

In April, a fallback in gas prices helped slow overall inflation. Nationally, average prices for a gallon of gas fell to as low as $4.10 in April, according to AAA, after having spiked to $4.32 in March. But since then, gas prices have surged to a record $4.40 a gallon.

Grocery prices, too, are still soaring, in part because Russia’s invasion of Ukraine has heightened the cost of wheat and other grains. Food prices rose 1% from March to April and nearly 11% from a year ago. That year-over-year increase is the biggest since 1980.

Such rapid inflation has led many Americans to cut back on spending.

Stocks fell on Wall Street on Wednesday, led by more drops in tech companies, after the report on inflation came in worse than feared.

Treasury yields initially jumped but pared their gains as the morning progressed. The 10-year Treasury yield climbed as high as 3.08% but fell back to 2.92% in later trading, below its late-tuesday level of 2.99%. The two-year yield, which moves more on expectations for Fed action, rose to 2.64% from 2.62% late Tuesday. It had climbed as high as 2.75% shortly after the report’s release.

The S&P 500 fell 65.87 points to 3,935.18, while the Nasdaq slid 373.44 points to 11,364.24. Both indexes posted five straight weekly losses heading into this week.

The Dow dropped 326.63 points to 31,834.11. The bluechip index has racked up six straight weekly losses. The Russell 2000 fell 43.65 points, or 2.5%, to 1,718.14.

Coinbase, a crypto trading platform, tumbled 26.4% after it reported much weaker results for the latest quarter than analysts expected.

Hamburger chain Wendy’s fell 10.8% after reporting disappointing profits. Callaway Golf jumped 10.2% and H&R Block surged 19.5% after reporting encouraging financial results.

Crude jumped again on Wednesday, with a barrel of benchmark U.S. oil rising 6% to settle at $105.71. Brent crude, the international standard, added 4.9% to settle at $107.51.