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Impending Economic Tumult: Will Two March 29 Triggers Cause a Stock Market Crash?

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stock market crash - 2 Stock Market Crash Triggers Loom on March 29. Be Warned.

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Worries of a stock market upheaval are mounting with the approach of two significant potential triggers on Friday, March 29. The Federal Reserve’s favored inflation gauge is set to release Friday morning, followed by comments from Fed Chair Jerome Powell only hours later.

So, what does this all imply for the stock market, you ask?

Looking back in time guides us in this case. Just a week before the Fed’s policy meeting, it’s doubtful Powell’s stance will sway significantly, unless there’s a significant spike in inflation visible in the Personal Consumption Expenditures (PCE) report.

After the Fed’s policy meeting, Powell maintained a relatively optimistic outlook on inflation progress and projected three forthcoming rate cuts:

β€œWe believe that our policy rate is likely at its peak for this tightening cycle and that, if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.”

While Powell cautioned that economic data might slow the process, this cautious approach is not out of character for him. Come Friday, we anticipate the Fed Chair retaining this stance.

Anxieties Grow Over Potential Stock Market Crash Preceding PCE Inflation Report

All eyes are on the PCE report scheduled for Friday. The February PCE is expected to follow a similar trend to the Consumer Price Index (CPI) report unveiled earlier this month.

In February, the CPI revealed higher-than-anticipated inflation, with a 0.4% month-over-month surge, pushing inflation to a 3.2% annual rate, surpassing forecasts of a 3.1% annual increase.

The spike in energy prices proved pivotal in the CPI data, rising by 2.3% in February, reversing a four-month deflationary trend in the inflation category.

Bloomberg predicts an unchanged February PCE, indicating an annual inflation rate of 2.4%. It forecasts the core PCE, which excludes Food and Energy, will climb by 0.2%, reflecting a 2.6% year-over-year inflation rate.

The primary concern is if inflation surpasses expectations significantly. This scenario could prompt the Fed to retain higher rates, a daunting prospect for Wall Street. If this unfolds, Powell may aim to soothe expectations by adopting a more hawkish tone this Friday.

On the publication date, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Possessing degrees in economics and journalism, Shrey Dua employs his extensive media and reporting background to offer well-informed commentary ranging from financial regulation and the electric vehicle industry to the real estate market and monetary policy. Shrey’s work has been featured in publications like Morning Brew, Real Clear Markets, the Downline Podcast, and more.

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