U.S. stock markets closed on Tuesday with mixed results, following the release of American inflation data. The Dow Jones Industrial Average gained 0.1 percent, settling at 49,761 points. Conversely, the Nasdaq 100 fell by 0.9 percent, ending at 29,065 points, while the broader S&P 500 closed in the red, down 0.2 percent to 7,401 points.
The poor market sentiment appeared partly due to the April US inflation figures, which showed the annual inflation rate climbing from 3.3 percent to 3.8 percent, exceeding what analysts had predicted. Initially, the numbers caused a widespread dip in US equities, though the indices later recovered to some extent.
Thomas Gitzel, Chief Economist at VP Bank, suggested that the rising inflation levels would likely eliminate any immediate talks of interest rate cuts. He stated that although the designated central bank president, Kevin Warsh, has expressed interest in rate reductions, current inflationary trends necessitate that Warsh postpone those plans.
According to Gitzel, continued inflation is inevitable, pointing specifically to persistent tensions in global energy markets. He noted that energy prices increased by 3.8 percent month-over-month, accounting for roughly 40 percent of the total monthly price increase. Furthermore, strong increases in rents contributed to a core inflation rate of 2.8 percent, rising above expectations.
The economist also provided a political critique, suggesting that the inflationary trends are detrimental to Donald Trump’s approval ratings. He argued that since the U.S. President campaigned on a promise to lower inflation, the current reality-where rising energy costs erode the real disposable income of American citizens-is the exact opposite of his platform.
In other market updates, the Euro weakened on Tuesday evening, trading at 1.1739 US dollars per Euro, meaning a Dollar bought for 0.8519 Euros. Gold prices also trended downward, falling 0.5 percent to $4,714 per fine ounce, or €129.10 per gram. In contrast, oil prices rose, with a barrel of Brent crude priced at $107.90 by German time, marking a 3.5 percent increase from previous trading.