Inflation inched downward in April. What does that mean for wealth management?

Welcome back to "Crash or Land," the column where Financial Planning checks up on the health of the U.S. economy. When a key new data point emerges, we ask wealth management's sharpest minds one question: Does it bring us closer to a recession or to a soft landing?

On Wednesday an important measure of inflation was released, and it offered a glimmer of hope after months of darkness. In April, the consumer price index rose by 3.4% from one year ago — down from 3.5% in March.

The decline is marginal, but it ends a streak of increases. From January to February, the CPI rose from 3.1% to 3.2%, and in March it jumped another 0.3%.

In April, consumers finally got some small measure of relief. Grocery prices rose by 1.1%, down from 1.2% in March. Gas prices climbed by 1.2%, down from 1.3%. And rents ticked up by 5.5%, down from 5.7%.

The April downshift eases pressure on the Federal Reserve, which has raised interest rates to historic highs to tame rising prices. That tactic appeared highly successful at first, bringing the CPI down from 9.1% in June 2022 to 3% in June 2023. But since then inflation has remained stubborn, with the CPI hovering above 3% for almost a year. 

The Fed's own preferred inflation measure, the personal consumption expenditures (PCE) index, has also shown little movement. "Core" PCE, which strips out volatile food and energy prices, was stuck at 2.8% in both February and March — above the Fed's 2% target.

Earlier this month, Fed Chair Jerome Powell admitted the recent data had affected his outlook.

"I would say my confidence is not as high as it was, having seen the readings in the first three months of the year," Powell said at a banking conference in Amsterdam.

READ MORE: Retirement confidence plunges as advisors fret over Fed's course

Late last year, the Fed signaled that it planned to cut interest rates three times in 2024. But amid months of discouraging data, those cuts have yet to arrive. In May, the central bank once again held the federal funds rate between 5.25% and 5.5%, where it's been since August. 

But on Wednesday morning, Wall Street appeared hopeful that cuts were back on the table. News of the April numbers sent stocks soaring, with both the S&P 500 and the Nasdaq jumping to record highs.

Apart from those short-term gains, how else might the changing inflation picture affect wealth management? Are interest rates more likely to come down? If so, which investments are likely to benefit, and which ones are likely to take a hit? And in general, is the economy closer to a soft landing or further away — or in roughly the same place?

For answers, we turned to some of the most prominent analysts on Wall Street. Here's what they said: