Inflation, consumer spending misses push US stocks lower 

The recent action paints an uncertain picture for future monetary policy moves

article-image

JHVEPhoto/Shutterstock and Adobe modified by Blockworks

share

This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.


The Fed’s preferred inflation gauge ticked higher in February while consumer spending continued to disappoint, painting an uncertain picture for future monetary policy moves. 

Annual core Personal Consumption Expenditures Index (PCE) came in at 2.8%, a far cry from central bankers’ 2% target. Economists had projected a 12-month reading of 2.7%. Month over month, core PCE increased 0.4% — again higher than estimates, which were 0.3%. 

Inflation-adjusted consumer spending increased only 0.1% last month, coming in on the lower end of estimates. Analysts had hoped that warmer weather would jumpstart spending after a severe winter across most of the country. 

Spending came in below expectations, even as personal income increased 0.8%, compared with projections of a 0.4% increase. 

Expectations for longer-term inflation were also on the rise. The University of Michigan’s one-year projection for inflation is now 5%. It’s the third-straight month the index has increased. 

Fed funds futures markets are now pricing in a 13% chance the Fed opts to lower interest rates in May. 

Stocks, unsurprisingly, did not take the inflation news well. The S&P 500 lost as much as 1.5% in the first few hours of Friday’s session. The index is poised to end Q1 with its worst quarterly performance since 2023. The Nasdaq Composite slid almost 2% in the first half of the trading day.  

The doom and gloom may not last too long, though, eToro analyst Bret Kenwell said.

“Historically speaking, the S&P 500 tends to perform pretty well in mild inflationary environments where annual core PCE is between 2% and 4%,” he explained. “But investors don’t seem to care about historical statistics right now.”

You can say that again. Have a good weekend, everyone; here’s to hoping for a better performance next week.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Research Report Templates.png

Research

Ethena Labs is leaping from its flagship synthetic dollar, USDe, to a full product suite—USDtb, iUSDe, and the Arbitrum-based Converge Chain—designed to marry crypto-native yields with TradFi-grade compliance. Our analysis shows how expanding into CME, ETF options, and tokenized Treasuries could lift protocol revenue from sub-$500 million in a bear case to several billion dollars if favorable regulation and institutional adoption align.

article-image

CEO Mike Silagadze tells Blockworks that the US is “open for business” and why its DeFi bank offering is the first of many

article-image

Doing one thing well and leaving everything else out is often what disruptive technologies do best

article-image

Why an analyst is kicking off COIN coverage with “buy” rating

article-image

“Bitcoin does not require a strong equity rally to move higher,” YouHodler markets chief Ruslan Lienkha said

article-image

President Trump’s comments that he will not look to fire Fed Chair Jerome Powell sent stocks higher in after-hours trading Tuesday