US stocks rise ahead of CPI inflation data

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By journalsofus.com


US stocks were higher on Tuesday as investors bide their time until a key inflation report comes out and potentially sheds light on the path of interest rates.

The benchmark S&P 500 (^GSPC) climbed about 0.4%, while the tech-heavy Nasdaq Composite (^IXIC) jumped about 0.5%. The Dow Jones Industrial Average (^DJI) added about 0.1%, or about 50 points.

Stocks are jittery ahead of the release of the consumer price index on Wednesday, which is seen as a tipping point for a market facing a slowdown in the next leg after a strong first quarter.

Given the continued strong performance of the US economy, investors are becoming less confident that the Federal Reserve will make the three rate cuts it has planned for this year. This has intensified the focus on the CPI print for March, and any sign that inflation has started to ease again will be seen as an invitation for a June policy change.

Meanwhile, diminished expectations of a rate cut have helped push 10-year Treasury (^TNX) yields near five-month highs – another potential headwind for stocks, with the 5% level a concern. Considered the main point. Benchmark yields were down nearly 3 basis points on Tuesday, trading around 4.4%.

Also, rising metal prices have raised concerns about its impact on inflation. Copper (HG=F), a key industrial input, rose about 0.8% early Tuesday, giving a 10% gain year to date, prompting talk of a new bull market. Gold (GC=F) rose about 0.8% to $2,371 an ounce, taking its rally to another new record.

Another catalyst on the horizon is the start of first-quarter earnings season, which begins in earnest on Friday with results from the likes of Citigroup (C), JPMorgan (JPM), and Wells Fargo (WFC).

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  • Can there be no reduction in rates?

    The market is expecting just two and a half 25 basis point cuts this year, down from six expected at the start of the year, according to Bloomberg data.

    As investors reflect on recent Fed talk and adopt a “higher for longer” interest rate mentality, an important question has emerged: Does the US economy even need to cut rates?

    ,[The Fed] wants to cut rates but the economy is standing in his way,” Steven Ricciuto, chief economist at Mizuho Securities USA, told Yahoo Finance Live on Tuesday morning. “The Fed is fighting the economy. “In particular, they’re fighting American consumers and that’s a fight I wouldn’t want to get involved in.”

    Ricciuto, who does not expect the central bank to cut interest rates this year, said there are certain risks if interest rates remain unchanged.

    He explained, “If the Federal Reserve cuts interest rates without the data justifying it, you could end up in an environment where you’ll start to embed a 3% inflation psychology in the market as opposed to a 2% inflation psychology. ” “That subsequently increases the fair value trading range of the 10-year note.”

    The 10-year Treasury (^TNX) yield is currently hovering near a five-month high with the 5% level considered the main point of concern.

    If Treasury yields rise, “that’s a real problem in terms of the outlook for the overall economy because clearly it will have a significant negative impact on the ability of households to buy a home,” Ricciuto argued.

  • US stocks rise as investors await key inflation data

    US stocks edged higher on Tuesday as investors await key CPI data due on Wednesday morning.

    The benchmark S&P 500 (^GSPC) climbed about 0.4%, while the tech-heavy Nasdaq Composite (IXIC) jumped about 0.5%. The Dow Jones Industrial Average (^DJI) added about 0.1%, or about 50 points.

    Meanwhile, subdued expectations of a rate cut have helped push 10-year Treasury (^TNX) yields near a five-month high. Benchmark yields were down nearly 3 basis points on Tuesday, trading around 4.4%.

  • Teens curb spending, but not everywhere

    According to the latest ‘Taking Stock’ research from Piper Sandler this morning, teens are limiting their spending.

    The spring survey showed that teens’ “self-reported” spending fell 6% year over year to $2,263, and increased just 1% from the fall.

    The biggest category winner is cosmetics.

    Spending on beauty reached the highest level since spring 2018, which is interesting in that Ulta CEO David Kimbell warned of a recession in the industry last week (slashing his stock price). The survey revealed that Elf Beauty (ELF) gained the highest market share compared to its competitors.

    Teens curb their spending.

    Teens curb their spending. (Piper Sandler)

  • PC recovery in progress

    Keep an eye on shares of PC makers Dell (DELL) and HP Inc. (HP) today.

    PC industry firm Canalys said Tuesday that total shipments of desktops and notebooks rose 3.2% year-on-year to 57.2 million units in the first quarter. The research organization says this is a sign of increased demand ahead of upcoming catalysts, such as the arrival of AI PCs and Windows 11 refreshes later this year.

    “The growth in Q1 2024 bodes well for a strong PC market throughout the year,” said Ishan Dutt, principal analyst at Canalys. “Sellers and channels are working through some of the final stages of inventory correction, and macroeconomic conditions in some markets are limiting demand. But the power of fresh opportunity, especially from businesses, is beginning to emerge. “The market is set to strengthen further in the coming quarters as customers prioritize upgrades in preparation for the massive transition to Windows 11.”

    PC recovery is in progress.

    PC recovery is in progress. (canals)



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