Today’s CPI report, showing that inflation was still high even if it was slowing, did not allay concerns of the Fed easing up on the rate hikes. So the Dow fell over 400 points by noon before rebounding by 1 pm to the level it stayed at to close down 156. The other indexes followed a similar pattern. So rate hike fears explain the crash and the rebound was seemingly in anticipation of better news tomorrow with retail sales data. The S&P has so far recouped 8% this year, the Nasdaq 14. What’s odd was that the rate-sensitive Nasdaq is the only index that closed in positive territory. 69% of the S&P has now beaten estimates with Q4 earnings expected to fall 2.8% vs 3.0% last week. Volume remains light at 10.7 billion.
Tue February 14, 2023 4:23 PM
Wall Street ends mixed as inflation data
supports rate worries
By Yohann M Cherian and Noel Randewich
DJ: 34,245.93 +376.66 NAS: 11,891.79 +173.67 S&P: 4,137.29 +46.83 2/13
DJ: 34,089.27 -156.66 NAS: 11,960.15 +68.36 S&P: 4,136.13
-1.16 2/14
Feb 14 (Reuters) - Wall Street stocks ended mixed on
Tuesday after U.S. consumer price data for January offered little to change
expectations about the Federal Reserve's path forward on interest rate hikes. U.S. consumer prices accelerated as Americans continued to be
burdened by higher rental housing costs, suggesting that the Fed will maintain
its fight against inflation. "Inflation
remains elevated, albeit it appears to be slowing," said Terry Sandven,
chief equity strategist at U.S. Bank Wealth Management in Minneapolis.
"Looking at today's price action, I think it might be a little bit of
profit-taking on the heels of strong year-to-date performance."
Of the 11 S&P 500
sector indexes, seven declined, led by real estate (.SPLRCR), down 1.08%, followed by a 0.95%
loss in consumer staples (.SPLRCS). The consumer discretionary index . The
electric car maker has rebounded over 60% in 2023 after losing two-thirds of
its value last year. Money market
traders are betting on at
least two more 25 basis point rate hikes this year, with interest rates
seen peaking at 5.28% by July.
Also adding to the investor angst were hawkish remarks by
Richmond Fed President Thomas Barkin and Dallas Fed
President Lorie Logan. Barkin said the Fed needs to prioritize quashing
inflation over risks to U.S. economic growth. Wall Street had an upbeat start to the year,
lifted by renewed interest in volatile growth stocks battered in 2022 as the
Fed raised rates aggressively to bring steep prices under control. The rally, however, stalled last week following
signs of a tight labor market and hawkish commentary from Fed policymakers.
The S&P 500 is up about 8% so far in 2023, while the
Nasdaq Composite Index (.IXIC) has
rebounded about 14%. Investors will closely watch January retail sales data on Wednesday for
hints on consumer spending amid worries of an economic slowdown.
The S&P 500 declined 0.03% to end at 4,136.17 points. The Nasdaq gained 0.57% at 11,960.15 points,
while Dow Jones Industrial Average (.DJI) declined 0.46% to 34,089.40
points.
Shares of Boeing
Co (BA.N) rose 1.3% to their highest in over
a year after Air India unveiled a deal to buy 220 of its
passenger planes. Coca-Cola Co (KO.N) slipped 1.7% despite a strong full-year profit forecast. Marriott International Inc (MAR.O) rose 4% after the hotel operator
forecast first-quarter earnings above Wall Street estimates as it benefited
from strong travel demand. Palantir Technologies (PLTR.N) soared more than 21% after the
data analytics firm forecast its first profitable year.
Of the more than half of S&P 500
firms that have reported results, nearly 69% have beaten profit expectations, as per
Refinitiv on Friday. However, analysts expect fourth-quarter earnings to fall 2.8% from a
year earlier.
Across the U.S. stock
market (.AD.US), decliners outnumbered advancers by a
1.1-to-one ratio. The S&P 500 posted
10 new highs and no new lows; the Nasdaq recorded 75 new highs and 76 new lows.
Volume on U.S. exchanges was relatively light, with 10.7
billion shares traded, compared to an average of 11.8
billion shares over the previous 20 sessions.
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