Invesco QQQ Trust slides on 3.8% CPI and 51% hike odds
Invesco QQQ Trust fell 2.3% on May 12 after April headline CPI unexpectedly rose to 3.8% year-over-year and core inflation hit 2.8%, reversing expectations for Fed rate cuts. Fed funds futures now assign a 51% chance of a rate hike by January 2027, triggering a steep technology sector selloff.
1. April Inflation Exceeds Expectations
April’s headline CPI jumped to 3.8% year-over-year, the highest reading since late 2023, while core inflation reached 2.8%, surprising investors who had forecast easing price pressures.
2. Shift in Fed Rate Outlook
Following the hotter-than-expected inflation data, Fed funds futures shifted sharply, now implying a 51% probability of at least one rate hike by January 2027 instead of earlier cut bets.
3. QQQ’s Tech-Heavy Selloff
Invesco QQQ Trust, with over 50% weight in technology names, declined roughly 2.3% on May 12 as investors rotated out of high-duration tech stocks facing higher-for-longer interest rates.