U.S. stocks inch to higher close as markets brace for CPI data, earnings

There was panic selling across the board from the outset, the indexes well into the red most of the day, the Dow down 300 by 11 a.m.  Then at 3 pm, a very sudden spurt to recovery to close near flat for a second day.  This is all boils down to one simple reality – Wednesday is CPI day and the markets are bracing for bad inflation news and though inflation is expected to continue slowly towards the 2% goal, small business optimism has sunk to an 11-year low.  

As today’s expert put it, “The continued deterioration of the small business index is actually really important.  Where the larger companies are well protected, small businesses are under extraordinary pressure.”  Since there have been so many below average days of late, the 4-week average has finally come even with volume which came in today at 10.3 billion. 

U.S. stocks inch to higher close as markets brace for CPI data, earnings

By Stephen Culp

Tue April 9, 2024 4:25 PM

DJ: 38,892.80  -11.24          NAS: 16,253.95  +5.43         S&P: 5,202.39  -1.95        4/8

DJ: 38,883.67  -9.13            NAS: 16,306.64  +52.68       S&P: 5,209.91  +7.52       4/9

NEW YORK, April 9 (Reuters) - The Nasdaq and S&P 500 posted modest gains on Tuesday, a day ahead of major inflation data, weighed down by financial stocks as investors braced for major U.S. banks to kick off earnings reporting season on Friday.  The tech-heavy Nasdaq Composite Index (.IXIC), opens new tab , boosted by chips (.SOX), opens new tab, enjoyed a more substantial advance, with the S&P 500 (.SPX), opens new tab nominally higher.  The blue-chip Dow Jones Industrial Average (.DJI), opens new tab closed essentially unchanged.  Wednesday's hotly anticipated Consumer Price Index (CPI) is at the top of most investors' minds as they tweak expectations on the timing and extent of the Federal Reserve's rate-cutting phase, following robust economic data such as last Friday's blockbuster employment report.

"The markets are nervous about tomorrow's CPI report and buying protection (amid) a growing perception that it could be an uncomfortably high inflation reading," said Michael Green, chief strategist at Simplify Asset Management in Philadelphia. "The market is moving to hedge itself."

JPMorgan Chase & Co (JPM.N), opens new tab, Wells Fargo & Co (WFC.N), opens new tab and Citigroup Inc (C.N), opens new tab, due to report results on Friday, were the three constituents in the S&P Banking index (.SPXBK), opens new tab to end lower.  "The financials kick off first-quarter reporting season and often set the tone," said Bill Northey, senior investment director at U.S. Bank Wealth Management, Billings, Montana. "We are looking to the cyclical areas as an indicator of the health of corporate America."

While analysts expect inflation to continue meandering down toward the U.S. central bank's 2% goal, the National Federation of Independent Business reported on Tuesday that small business optimism touched an 11-year low in March, with inflation as the most pressing concern.  "The continued deterioration of the small business sentiment index is actually really important," Green added. "It's the same thing that we've seen in the past couple of cycles where the larger companies are well protected while small businesses are under extraordinary pressure." 

The Dow Jones Industrial Average (.DJI), opens new tab fell 9.13 points, or 0.02%, to 38,883.67. The S&P 500 (.SPX), opens new tab gained 7.52 points, or 0.14%, at 5,209.91 and the Nasdaq Composite (.IXIC), opens new tab added 52.68 points, or 0.32%, at 16,306.64.  Nine the 11 major sectors in the S&P 500 closed higher, with real estate (.SPLRCR), opens new tab enjoying the largest percentage gains. Financials (.SPSY), opens new tab were the biggest laggards.

Analysts are expecting aggregate S&P 500 first-quarter earnings growth of 5.0% year-on-year, down from 7.2% at the start of the quarter, according to LSEG.  Cryptocurrency and blockchain-related stocks declined, tracking falling bitcoin prices. Exchange operator Coinbase Global (COIN.O), opens new tab and software company MicroStrategy (MSTR.O), opens new tab dipped 5.5% and 4.8%, respectively.  Moderna (MRNA.O), opens new tab was a bright spot, jumping 6.2% after the drugmaker's individualized cancer vaccine developed with Merck (MRK.N), opens new tab showed promise in an early-stage trial.  Alphabet Inc's (GOOGL.O), opens new tab shares gained 1.1%, pushing the company closer toward the $2 trillion market cap threshold.

Advancing issues outnumbered decliners on the NYSE by a 1.44-to-1 ratio; on Nasdaq, a 1.33-to-1 ratio favored advancers.  The S&P 500 posted 13 new 52-week highs and one new low; the Nasdaq Composite recorded 62 new highs and 77 new lows.

Volume on U.S. exchanges was 10.31 billion shares, compared with the 10.31 billion average for the full session over the last 20 trading days.