1. Inflation growth slowed in March, nearing the Fed's target rate. 2. PCE index was flat monthly, annual growth at 2.3%. 3. Core PCE, excluding food and energy, also flat at 2.6% annually. 4. Figures align with economists' predictions, indicating stable inflation outlook. 5. Fed policymakers focus on PCE data to manage price increases.
The slowing inflation suggests potential for the Fed to pause rate hikes, fostering a favorable environment for stocks, similar to prior periods of stable inflation when the S&P 500 rallied, such as in late 2019.
The release of PCE data is a key economic indicator closely monitored by investors, affecting market expectations around interest rates and economic growth, directly influencing S&P 500 valuations.
The immediate impact of inflation data tends to influence market sentiment quickly, as seen in past months following similar reports.