Hotter-than-expected inflation data dents Fed rate cut expectations, pushing DJIA futures sharply lower ahead of key economic reports.
Dow Jones Industrial Average futures plunged nearly 400 points in 15 minutes after April’s Consumer Price Index rose 3.8% year-over-year, exceeding March’s 3.3% print. The Bureau of Labor Statistics cited energy costs, up 3.8% month-over-month, as a key driver, with gasoline prices surging 30% above year-ago levels amid geopolitical tensions in the Middle East.
Core CPI, excluding food and energy, climbed 0.4% month-over-month and 2.8% year-over-year, both above forecasts. The data underscores persistent inflationary pressures, with price increases spreading beyond energy into broader goods and services. Markets had already trimmed rate cut bets ahead of the release, but the report erased remaining expectations for Fed easing in 2026.
Futures recovered partially, trading above 49,500 after the initial sell-off, but the shift in rate cut narratives weighed on sentiment. The CME Group’s FedWatch tool now shows near-zero probability of a Fed cut this year, reflecting heightened concerns over sticky inflation.