Consumer Price Index for May: Live Updates

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U.S. consumer inflation in May reached its highest level in more than four decades as surging energy and food prices pushed prices higher.

The Labor Department on Friday said that the consumer-price index increased 8.6% in May from the same month a year ago, marking the highest reading since December 1981.

Economists surveyed by The Wall Street Journal had expected the consumer-price index to rise 8.3% in May.

U.S. stocks opened lower. The S&P 500 fell 1.5% shortly after the opening bell. The Dow Jones Industrial Average declined 483 points, or 1.5%, and the Nasdaq Composite dropped 1.8%.

Markets had been on edge waiting for Friday’s inflation figures. Heightened inflation is likely to put pressure on the Fed to lift interest rates quickly in an effort to temper rising prices.

U.S. consumer inflation in May reached its highest level in more than four decades as surging energy and food prices pushed prices higher.

The Labor Department on Friday said that the consumer-price index increased 8.6% in May from the same month a year ago, marking the highest reading since December 1981.

Economists surveyed by The Wall Street Journal had expected the consumer-price index to rise 8.3% in May.

U.S. stocks opened lower. The S&P 500 fell 1.5% shortly after the opening bell. The Dow Jones Industrial Average declined 483 points, or 1.5%, and the Nasdaq Composite dropped 1.8%.

Markets had been on edge waiting for Friday’s inflation figures. Heightened inflation is likely to put pressure on the Fed to lift interest rates quickly in an effort to temper rising prices.

U.S. stock markets opened lower on Friday as investors digested the latest round of inflation data from the Labor Department.

The S&P 500 was recently down 1.6% The blue-chip Dow industrials were off 1.6%, while the tech-focused Nasdaq Composite fell 1.7%. All 11 of the S&P 500s sectors were in the red to start the session, showing losses of at least 1% across the board.

Futures had fallen premarket after the release of fresh data showing that inflation accelerated in May. Read our full Friday markets wrap-up here.

Investors awaiting this morning’s inflation data on Thursday pulled stock indexes down in the last hour of the session, which until that point had seen comparatively small declines. The S&P 500 closed down 2.4%. The Dow industrials lost 1.9%, while the Nasdaq retreated 2.7%. All three indexes are poised the finish the week lower.

The 10-year Treasury yield, meanwhile, advanced to 3.041% Thursday, from 3.028% Wednesday. Yields and bond prices move inversely. The yield was recently at 3.088%.

Fed Is Likely to Signal Half-Point Rate Rises Through September After Inflation Report

The Marriner S. Eccles Federal Reserve building in Washington, D.C.JOSHUA ROBERTS/BLOOMBERG NEWS

Another high inflation report last month is likely to lead more Federal Reserve officials to anticipate a fourth consecutive half-percentage-point rate rise will be warranted at their meeting this September.

The Fed has already indicated it will raise rates by a half point at its meeting next week and that it is very likely to do so again in July. Officials have said that they would continue to raise rates at that pace if inflation doesn’t show signs of a convincing slowdown.

The Labor Department reported on Friday that the consumer-price index rose 8.6% in May from the same month a year ago, pushing inflation to a new 40-year high. Rising fuel prices and supply-chain disruptions from Russia’s war against Ukraine have sent prices up in recent months.

The Fed raised rates last month by a half percentage point for the first time since 2000, bringing its benchmark short-term interest rate to a range between 0.75% and 1%.

Fed Chairman Jerome Powell said the central bank could continue to raise rates at that pace until it sees conclusive evidence that inflation is easing, and Friday’s report offered the opposite.

“Truthfully, this is not a time for tremendously nuanced readings of inflation. We need to see inflation coming down in a convincing way…and until we see that, we’re going to keep going,” Mr. Powell said in an interview last month. “We’re not going to assume that we’ve made it until we see that, and we’re not seeing that right now.”

Dollar Reaches Three-Week High After Inflation Data

The dollar rose to a three-week high after May’s U.S. inflation data exceeded market expectations.

The U.S. Dollar Index, which tracks the currency against a basket of others, rose to 103.939, its highest level since mid-May, after the data from 103.523 beforehand.

Consumer prices rose 8.6% year-on-year and 1% month-on-month in May. Economists polled by the Journal had forecast rises of 8.3% and 0.7%, respectively.

“Basically, inflation isn’t near its peak levels, and unfortunately, there is a lot more of these soaring numbers to come,” AvaTrade analyst Naeem Aslam said in a note. Higher inflation means more monetary policy tightening by the Federal Reserve, he says.

nflation Data Hits Futures, Shorter-Term Treasurys: Charts

U.S. stock futures fell and two-year Treasury yields climbed after data showed inflation hit a new four-decade high in May.

With the Federal Reserve engaged in a campaign to cool inflation by raising interest rates, investors have been closely watching for any indication that pricing pressures are starting to ease.

S&P 500 futures were recently down 1.7%, after hovering around the flatline shortly before the announcement.

The yield on the two-year U.S. Treasury note, which often climbs when investors expect tighter monetary policy, rose to 2.939%, according to Tradeweb, from 2.815% Thursday.

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Oil prices slipped. Brent crude, the international benchmark, traded at around $122.81 per barrel, compared to roughly $124 before the announcement.

The U.S. dollar advanced. The WSJ Dollar index, which measures the greenback against a basket of 16 currencies, rose to 96.49. It was 96.13 earlier.

Auto Stocks Rise Premarket After Data Shows Used Car Prices Climbed Again
Bad news on the inflation front is turning out to be good news for auto retailers.

Part of the surprise from Friday’s report was that used car prices, which had fallen after hitting a record in January, climbed again in May. That’s worrying to those who were counting on a sustained decline in vehicle prices to help ease broader inflationary pressures.

Shares of used car seller CarMax rose 1.1% in premarket trading. O’Reilly Automotive, which sells automobile parts, tools and supplies, climbed 0.9%.

“How bad was the inflation report? Even used car prices, which had been the ray of hope for easing price pressures after 3 straight months of declines, jumped 1.8% for the month of May,” said Greg McBride, chief financial analyst at Bankrate, in emailed comments.

“Any hopes that the Fed can ease up on the pace of rate hikes after the June and July meetings now seems to be a longshot,” he added.

Inflation Data Pressures Markets, Ramps Up Expectations for Rate Increases

Well, that wasn’t what investors were hoping to see.

U.S. stock futures are losing ground after data showed inflation rose to a fresh four-decade high in May. Heading into Friday’s data release, investors had already anticipated an aggressive pace of interest-rate increases from the Federal Reserve.

Another higher-than-expected inflation reading has just added fuel to the argument that the Fed will need to act with even more force to rein in rising price pressures. Federal-funds futures, which track changes in traders’ expectations for monetary policy, showed the market pricing in three half-point interest-rate increases through September, according to CME Group.

About the only things rising premarket: energy stocks. Shares of companies like Valero Energy, Sempra Energy and ConocoPhillips all rose at least 0.6% in premarket trading, extending a streak of dominance for the energy sector this year. Energy has been one of the few beneficiaries of this year’s rise in inflation as surging oil prices have lifted profits at oil and gas companies to records.

The Journal’s Dion Rabouin will discuss inflation live on YouTube at 9 a.m. ET. You can watch here.

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