Investing.com – Wall Street traded lower on Wednesday after dismal economic data that was thought to be unable to stay the hand of the Federal Reserve (Fed) in its policy announcement later in the session and oil sank on a smaller-than-expected decline in U.S. stockpiles.
At 10:59AM ET (14:59GMT), the Dow Jones slipped 15 points, or 0.07%, the S&P 500 fell 4 points, or 0.16%, while the Nasdaq Composite dropped 3 points, or 0.05%.
The consumer price index (CPI) showed that inflation continued to ease in May, with the annualized reading dropping to 1.9%, while the core CPI fell even further to 1.7%.
Retail sales also surprised with an unexpected decline in May, showing weakness in an economy where consumption represents about 70% of growth.
Though the weaker-than-expected data caused jitters among market players with the dollar and gold both reversing course, and the 10-year Treasury yield sinking around 8 basis points to 2.126%, experts did not expect the readings to change the fact that the Fed was widely expected to hike rates by 25 basis points to a range of 1.00% to 1.25% in its announcement at 2:00PM ET (18:00GMT).
However, markets became even more skeptical that the Fed would be able to increase rates another time this year with odds in Fed fund futures slipping down to just 29%, from an already meager 42% at the start of the day.
The data will increase the pressure on Fed chair Janet Yellen at her 2:30PM ET (18:30GMT) press conference to explain how the CPI reading fits into previous remarks that the decline in inflation was transitory.
All this on a day where markets were looking for Yellen to clarify whether the Fed expected its next tightening of policy to be either another rate hike or the start of reducing its $4.5 trillion balance sheet.
Meanwhile, oil sank 3% as U.S. crude inventories declined less than expected.
U.S. crude futures tumbled 3.42% to $44.87 by 11:01AM ET (15:01GMT), while Brent oil sank 3.28% to $47.12.
On a light day for company news, shares in H&R Block (NYSE:HRB) jumped around 10% after the tax preparation company beat earnings forecasts and reported its first annual increase in profit in three years.