By Yasin Ebrahim

Investing.com – The S&P 500 cut some losses Thursday, but remained on track for a first quarter loss, as investors digested further data pointing to red-hot inflation just as President Biden announced the U.S. planned to release a record amount of emergency oil supplies to curb rising energy prices.

It fell by 0.3%.

Biden indicated that the U.S. plans to reduce the rising cost of energy by releasing oil every day from their strategic reserves. In total, up to 180 million barrels are set to be released over six months, which if realized would be largest “release from the stockpile since it was created in 1975,” Stifel said in a note.

Oil prices dropped more than 6%, and they were further pressured after OPEC and its allies Russia decided to keep the plans of adding 430,000 barrels per hour starting May. This was despite calls by world leaders for increased production.

The only sector trading at or above the flatline was energy stocks. They were supported by Pioneer Natural Resources (NYSE:), Baker Hughes (NYSE:), Schlumberger NV (NYSE:).

The latest economic data point to further evidence of the impact of energy and other commodity prices that have pushed inflation well above the Fed’s 2% target.  

Inflation measure preferred by the Federal Reserve, the price index for personal consumption expenditures (PCE), excluding food, saw the largest gain in 12 months since April 1983.

Wall Street analysts believe that the Fed will follow up the 25-basis point rate increase with more aggressive increases later in the year, given the current inflation levels.

Morgan Stanley, JPMorgan and Goldman Sachs predict that the Fed will raise rates 50 basis points by May and June.

People are worried that the Fed will cause a recession by betting on rate hikes. In anticipation of a recession, the Bond market has priced in this risk. After weeks of flattening, the 10-2-2 Treasury yield curve was briefly inverted this week.

Bank stocks, which led the weakness on Thursday, remain on course to post a loss for the quarter as flattening in the yield curve dents net interest margin, limiting banks’ profit from lending.

State Street (NYSE:), Signature Bank The biggest droppers on the day were Bank of America (NYSE) and (NASDAQ:), both down over 3%.

Tech was in the red as well on the last day of the quarter. This is because investors seemed to be taking profits after a month that saw strong gains.

Chip stocks were under pressure following a 7% rout in Advanced Micro Devices (NASDAQ:) after Barclays downgraded the chipmaker to underweight from equal-weight cut its price target on the stock to $115 from $148, citing “cyclical risks across several end markets.”