Wall St ends mixed as inflation data comes into focus

The Dow and S&P started the day at Ground Zero and rose steadily, the Dow gaining about 200 points. The Nasdaq too started at zero, and then fell precipitously until about noon when it too began a steady recovery almost to break-even.  Then, about 3:30, all three dropped like a rock, the Dow still hanging on to about half of its gain but the other two closing in the red, the Nasdaq deeply.  The surge was attributed to a consensus that inflation worries are overblown, especially on the heels of Chicago Fed prez warning the Fed not to raise rates again. Also, cyclicals doing well is taken as a healthy sign against recession.  

But with so much additional data coming later, especially the all-important CPI report due Wednesday, the late-day decline was a return to “wait and see” or “the calm before the storm.”  Headline CPI is expected to drop significantly while Core CPI will gain just a tad, putting the odds of a ¼ point hike now at 67%.  Q1 starts in earnest on Friday with the three big banks kicking things off.  With all the fence-sitting, volume remains way below average at just 9.84 billion. 

Tue April 11, 2023  7:04 PM

Wall St ends mixed as inflation data comes into focus

By Stephen Culp

DJ: 33,586.52  +101.23        NAS: 12,084.35  -3.60          S&P: 4,109.11  +4.09       4/10

DJ: 33,684.79  +98.27          NAS: 12,031.88  -52.48        S&P: 4,108.94  -0.17        4/11

NEW YORK, April 11 (Reuters) - Wall Street stocks ended mixed on Tuesday, losing steam late in the session as investors awaited crucial inflation data and the unofficial kick-off of first-quarter reporting season.  The Dow (.DJI) closed in positive territory with economically sensitive sectors such as industrials (.SPLRCI), materials (.SPLRCM) and transports (.DJT) providing a boost, while tech (.SPLRCT) and tech-adjacent megacap stocks pulled the Nasdaq to a lower close.  The bellwether S&P 500 ended essentially unchanged.

"When you see cyclicals leading, that is saying that recession worries could be somewhat overblown," said Ryan Detrick, chief market strategist at Carson Group in Omaha. "That's a healthy sign, what you wouldn't expect to see if we were headed straight for recession."  Stocks briefly gained momentum in the afternoon as Chicago Fed President Austan Goolsbee urged caution, warning that the Federal Reserve needs to be careful about raising rates too aggressively in its efforts to tame inflation.  With a lack of market moving catalysts, investors looked ahead to Wednesday's consumer price index (CPI) for any evidence that the long, slow inflation cooldown continues.

"It's the calm before the storm," Detrick added. "With huge inflation data tomorrow, Fed minutes coming out soon and earnings right around the corner, traders are taking a wait and see approach to see how the inflation data comes in."  On a monthly basis, analysts see headline and core CPI cooling to 0.2% and 0.4%, respectively. But year-on-year, while consensus estimates call for a significant drop in the headline number - to 5.2% from 6.0% - the core measure, which strips out volatile food and energy prices, is expected to gain heat, rising to 5.6% from 5.5%.  As inflation slowly cools to the Fed's average annual 2% target, market participants are banking on a 67% likelihood of another 25 basis point interest rate hike at the conclusion of its May monetary policy meeting, according to CME's FedWatch tool. "(The) 25 basis point hike is probably going to happen, and is baked into stock prices," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. "How they position it for the next meeting is key, because so many people are expecting a downturn in the economy."

Beyond CPI, investors are eyeing first-quarter reporting season, which surges from the starting gate on Friday with results from three major banks, Citigroup Inc (C.N), JPMorgan Chase & Co (JPM.N) and Wells Fargo & Co (WFC.N).  Analysts expect aggregate first-quarter S&P 500 earnings falling 5.2% year-on-year, a stark reversal from the 1.4% annual growth seen at the beginning of the quarter.

The Dow Jones Industrial Average (.DJI) rose 98.27 points, or 0.29%, to 33,684.79; the S&P 500 (.SPX) lost 0.17 points, essentially flat, at 4,108.94; and the Nasdaq Composite (.IXIC) dropped 52.48 points, or 0.43%, to 12,031.88.  Among the 11 major sectors of the S&P 500, communication services (.SPLRCL) and tech (.SPLRCT) ended in the red, while energy (.SPNY) and financials (.SPSY) enjoyed the largest percentage gains.

Cryptocurrency-related shares such as Coinbase Global Inc (COIN.O), Riot Platforms Inc (RIOT.O) and Marathon Digital Holdings Inc (MARA.O) climbed between 6% and 17% as bitcoin broke through the $30,000 level for the first time in 10 months.  CarMax Inc (KMX.N) surged 9.6% after the used-car retailer posted a consensus-beating quarterly profit.  Drugmaker Moderna Inc (MRNA.O) slipped 3.1% after the company said its closely watched flu vaccine failed to meet the criteria for "early success" in a late-stage trial.

Advancing issues outnumbered decliners on the NYSE by a 3.04-to-1 ratio; on Nasdaq, a 1.49-to-1 ratio favored advancers.  The S&P 500 posted nine new 52-week highs and no new lows; the Nasdaq Composite recorded 64 new highs and 118 new lows.

Volume on U.S. exchanges was 9.84 billion shares, compared with the 11.95 billion average over the last 20 trading days.