Nasdaq slips from near all-time high, Dow up modestly ahead of inflation data

The narrative says that everyone was being cautious today but the charts tell a very different story with all the indexes going great guns in the morning, then suddenly falling precipitously at almost exactly 1:15 p.m.  The Dow was up some 260 points, even the Nasdaq bolted almost a hundred, then total collapse at 1:15 p.m. The only conjecture is that investors decided with the coming CPI and PPI that however the numbers are running, hot or cold, it’s not going to change the Fed’s position on cuts and that, therefore, there was a sudden decision not to make any big bets.  

Both the S&P and Nasdaq ended in the red, the Dow remaining in the black though down half from its 1:15 high, with traders moving out of tech and into the Dow as a hedge against rate cut pessimism. Nvidia was the day’s big winner momentarily intraday exceeding Amazon in market-cap and becoming the 4^th most valuable U.S. company, which is why it made no sense for the afternoon’s run from tech. Rate cut pessimism abounds and now even a May cut has lost its luster, falling from 95% last month to just over 50% today. With the consensus of “no big bets,” volume was below average at 11.14 billion. 

Nasdaq slips from near all-time high,

Dow up modestly ahead of inflation data

By Carolina Mandl, Johann M Cherian and Ankika Biswas

Mon February 12, 2024 4:25 PM

DJ: 38,671.69  -54.64         NAS: 15,990.66  +196.95       S&P: 5,026.61  +28.70     2/9

DJ: 38,797.38  +125.69      NAS: 15,942.55  -48.12          S&P: 5,021.84  -4.77        2/12

Feb 12 (Reuters) - The Nasdaq slipped on Monday afternoon after briefly surpassing its record closing high from November 2021, while the Dow rose modestly ahead of two U.S. inflation reports this week that could influence Federal Reserve policy.  The benchmark S&P 500 (.SPX), opens new tab closed slightly lower but remained just above the 5,000-point level it crossed on Friday.  Traders awaited January's Consumer Price Index (CPI) and Producer Price Index (PPI) this week to gauge prospects for interest rate cuts. This week the market also gets data on industrial production, retail sales and preliminary University of Michigan consumer sentiment.

"The CPI report tomorrow will be just another important data point on where inflation is and that will translate to the pace of when we may see a cut in the Fed funds rate," said Michael Rosen, chief investment officer at Angeles Investments. "No one wants to make a big bet one way or the other."  The Nasdaq lost steam in the afternoon after rising early in the session past its highest closing level hit in November 2021, within a percentage point of its all-time intra-day high of 16,212.229.

"An inflation number that's really hot might get some investors a bit nervous, but other than that the Fed is going to be in the same mode," said Joe Saluzzi, co-manager of trading at Themis Trading.  Over the past four months, megacaps with greater exposure to artificial intelligence have spearheaded a bull market on Wall Street as other stocks also rose on hopes of imminent rate cuts and an upbeat outlook from businesses.  During the session, Nvidia (NVDA.O), opens new tab crossed above Amazon.com (AMZN.O), opens new tab in market capitalization, as the euphoria around AI catapulted the chipmaker to the fourth-most valuable U.S. company, but ended the day behind the online retailer. Nvidia ended the day up 0.16%, while Amazon dipped 1.2%.  With recent data reflecting a robust economy, central bankers have shown less eagerness for early rate cuts. The odds for at least a 25-basis-point rate reduction in May have dropped to 52.2%, from over 95% at the start of 2024, as per the CME FedWatch Tool.

The S&P 500 (.SPX), opens new tab lost 4.12 points, or 0.08%, to end at 5,022.49 points, while the Nasdaq Composite (.IXIC), opens new tab lost 42.74 points, or 0.27%, to 15,947.92. The Dow Jones Industrial Average (.DJI), opens new tab rose 135.76 points, or 0.35%, to 38,807.45.  The small caps Russell 2000 index (.RUT), opens new tab climbed 1.9%.

"Investors are rotating into those areas that have not kept pace with the broader market because that's possibly where there is greater value," said Sam Stovall, chief investment strategist at CFRA Research. "Today could be sort of a bottom fishing day for the market."

Among other movers, Diamondback Energy (FANG.O), opens new tab jumped 9.4%, helping energy (.SPNY), opens new tab to top the 11 S&P 500 sectors with gains. Diamondback announced a $26-billion deal to buy the largest privately held oil and gas producer in the Permian basin, Endeavor Energy Partners.  Joby Aviation (JOBY.N), opens new tab gained 6.4% as the electric-powered aircraft maker signed an agreement to launch air taxi services in the United Arab Emirates by early 2026.

On the Nasdaq 2,835 issues advanced and 1,452 declined as a 1.95-to-1 ratio favored advancers. On the NYSE advancing issues outnumbered declining ones by a 3.4-to-1 ratio. There were 592 new highs and 46 new lows.  The S&P 500 posted 53 new 52-week highs and no new lows while the Nasdaq recorded 344 new highs and 53 new lows.

On U.S. exchanges 11.14 billion shares changed hands compared with the 11.72 billion moving average for the last 20 sessions.