• Fed Chair Jerome Powell’s remarks in December about a central bank policy pivot “got markets really, really excited toward the end of 2023,” said Gregory Faranello, head of U.S. rates strategy at AmeriVet Securities. “And what we’ve spent the first quarter and now into the second quarter here doing is really challenging his narrative on rate cuts.”

That was not what the market wanted.

The consumer price index rose 0.4% month over month in March and 3.5% year over year. That’s more than economists polled by Dow Jones expected. The year-on-year increase also marks a reacceleration from February, when CPI increased by 3.2%.

The report shattered what little hope remained for a June Federal Reserve rate cut. It also sent stocks into a tailspin. The Dow Jones Industrial Average dropped more than 400 points, while the S&P 500 fell nearly 1%.

Fed Chair Jerome Powell’s remarks in December about a central bank policy pivot “got markets really, really excited toward the end of 2023,” said Gregory Faranello, head of U.S. rates strategy at AmeriVet Securities. “And what we’ve spent the first quarter and now into the second quarter here doing is really challenging his narrative on rate cuts.”

Treasury yields shot up following the numbers. The benchmark 10-year Treasury note yield broke above 4.5%, and its 2-year counterpart neared 5%.

Faranello noted the 10-year could stay in a broad range between 4.5% and 5% going forward. However, he noted that the core personal consumptions expenditures index — the Fed’s preferred inflation gauge, which rose 2.8% in February — could show more progress than CPI.

“The spread between CPI and PCE is quite wide right now,” he said. “So there is reason to believe that the PCE numbers will tell a different story” than what investors saw Wednesday.

Elsewhere on Wall Street this morning, Raymond James hiked its price target on Nvidia to $1,100 from $850, implying 26.4% upside.

“We believe concerns regarding a potential pause in customer spending ahead of Blackwell ramps are unwarranted as inferencing demand continues to outpace GPU supply,” analyst Srini Pajjuri wrote in a note. “We expect revenue momentum to sustain well into 2025 given compelling TCO benefits of Blackwell, exponential growth in AI model complexity, and intense competition among hyperscalers.”