US close: Stocks lower following hotter-than-expected CPI reading

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Wall Street stocks closed sharply lower on Wednesday as market participants digested a hotter-than-expected March consumer price index.

At the close, the Dow Jones Industrial Average was down 1.09% at 38,461.51, while the S&P 500 lost 0.95% to 5,160.64 and the Nasdaq Composite saw out the session 0.84% weaker at 16,170.36.

The Dow closed 422.16 points lower on Wednesday, easily extending modest losses recorded in the previous session.

Wednesday's primary focus was inflation data from the Bureau of Labor Statistics, which revealed that in seasonally adjusted terms, its consumer price index increased at a month-on-month pace of 0.4% in March. The increase was more than expected amid gains in the cost of energy, clothing and medical care services. Year-on-year, CPI was ahead by 3.5%, having risen by 3.2% during the previous month. Core CPI, meanwhile, was up by 0.4% over the month, against a consensus forecast for 0.3%.

"Financial markets are not going to like the above-consensus gain in the headline and core CPI," chipped in Ryan Sweet, chief US economist at Oxford Economics. "Some tightening in financial market conditions may do some of the work for the Fed, allowing it to sit on its hands potentially longer than we anticipate."

Elsewhere on the macro front, minutes from the Federal Open Markets Committee's latest policy meeting showed central bankers voiced concerns that inflation wasn't moving lower quickly enough, with FOMC members voting to keep language in its post-meeting statement that they would not be cutting rates until they "gained greater confidence" that inflation was on a steady path back to its 2% annual target.

In the corporate space, Delta shares lost ground despite posting a solid set of first-quarter earnings that came in ahead of expectations, while WD-40 traded lower after falling short of revenue forecasts for the second quarter.

Reporting by Iain Gilbert at Sharecast.com

Dow Jones - Risers

Walmart Inc. (WMT) $60.62 1.39%
Chevron Corp. (CVX) $162.67 0.41%
Procter & Gamble Co. (PG) $157.33 0.37%
Travelers Company Inc. (TRV) $224.38 0.24%
Caterpillar Inc. (CAT) $372.07 0.05%
Merck & Co. Inc. (MRK) $126.76 0.03%
3M Co. (MMM) $92.62 0.02%
Dowdupont Inc. (DWDP) $0.00 0.00%
McDonald's Corp. (MCD) $268.78 -0.29%
Walt Disney Co. (DIS) $117.19 -0.66%