(Bloomberg) — The stock market lost traction and bond yields rose after data pointed to an economy that is slowing amid stubborn inflationary pressures, posing a challenge to the outlook of Federal Reserve rate cuts.
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Equities wavered, following a report that showed US consumer sentiment declined to a six-month low as short-term inflation expectations picked up. While a slowdown in key sectors has encouraged bets on policy easing, a chorus of Fed officials continued to echo the higher-for-longer mantra as they try to bring inflation back to the central bank’s 2% target.
“The Fed is walking a tightrope as they balance both mandates of price stability and growth,” said Jeff Roach at LPL Financial. “Although it’s not our base case, we do see rising risks of ‘stagflation’ — a concern the markets will have to deal with.”
The S&P 500 hovered near 5,215, while heading toward its third straight week of…
