Wall Street barely budges as it braces for Wednesday’s inflation report
People walk past the New York Stock Exchange Tuesday, April 9, 2024 in New York.European equities have dipped in early trading while Asian stocks closed mostly higher, with investors mainly focusing on a U.S. inflation report and what it means for interest rate cuts by the Federal Reserve. (AP Photo/Peter Morgan)
NEW YORK — U.S. stock indexes held at a near standstill again on Tuesday, as traders made their final moves ahead of some potentially market-moving reports.
The S&P 500 edged up by 7.52 points, or 0.1 percent, to 5,209.91 after barely budging the day before. The Dow Jones Industrial Average slipped 9.13 points, or less than 0.1 percent, to 38,883.67, while the Nasdaq composite rose 52.68, or 0.3 percent,, to 16,306.64.
Treasury yields eased in the bond market ahead of Wednesday’s highly anticipated update on inflation at the U.S. consumer level. This week will also bring other reports on inflation, while big U.S. companies will begin delivering their reports for how much profit they made during the first three months of the year.
The dominant question hanging over Wall Street is whether inflation will cool enough to convince the Federal Reserve to deliver the cuts to interest rates that traders are craving and have been betting on.
READ: When will the US Fed cut rates? Maybe later or not at all
Some doubts have crept in following a series of hotter -than- expected reports on the economy, and traders now expect just two or three cuts to rates this year. Some are even talking about the possibility of zero. That’s down from forecasts at the start of the year for six or seven cuts, according to data from CME Group.
The Fed’s main interest rate has been sitting at its highest level in more than two decades, and the fear is that rates left too high for too long can cause a recession.
Fewer rate cuts
If fewer cuts arrive this year, the onus will be on companies to deliver strong growth in profits to justify the nearly 25-percent leap for the S&P 500 since the end of October. Critics say stock prices look expensive on several measures, and either profits need to rise or interest rates need to fall to make them look more reasonable.
Strategists at Bank of America are looking for Wednesday’s inflation update to show a cooldown after ignoring food and energy prices, which can zigzag sharply. Such a result would likely increase traders’ expectations for a cut to rates in June, which the market currently sees as slightly better than a coin flip’s probability.
While a jump in oil prices this year has raised worries about a feedthrough into inflation, oil would likely need to rise “well above levels seen even in the peak Russia-Ukraine commodity price spike for a meaningful impact on core inflation,” the Bank of America strategists said in a BofA Global Research report.
READ: OPEC+ keeps output policy steady as oil nears $90 a barrel
A barrel of benchmark U.S. crude fell $1.20 to settle at $85.23, trimming its gain for the year so far below 20 percent. Brent crude, the international standard, fell 96 cents to $89.42 per barrel.
On Wall Street, Apple helped nudge the S&P 500 higher by rising 0.7 percent. It trimmed it loss for the year to a shade below 12 percent.
Norfolk Southern rose 1.3 percent even though the railroad reported preliminary earnings results for the first quarter that were shy of analysts’ expectations.
It agreed to pay $600 million in a class-action lawsuit settlement related to a fiery train derailment last year in eastern Ohio. The company said the agreement, if approved by the court, will resolve all class action claims within a 20-mile radius from the derailment and personal injury claims within a 10-mile radius for those choosing to participate.
Nvidia, Super Micro Computer sink
Some of Wall Street’s largest losses came from the same stocks that have been the biggest winners in the market’s frenzy around artificial-intelligence technology.
Nvidia sank 2 percent, and because it’s one of the biggest stocks in the market, it was the single heaviest force weighing on the S&P 500. Super Micro Computer fell 2.6 percent, though its stock has still more than tripled so far this year.
Tilray Brands tumbled 20.7 percent after the cannabis company reported weaker revenue growth for its latest quarter than analysts expected.
In the bond market, the yield on the 10-year Treasury eased to 4.35 percent from 4.42 percent late Monday.
In Europe, stock indexes sank ahead of a decision by the European Central Bank on Thursday about interest rates. Many investors expect it to hold rates steady.
Stock indexes were mixed in Asia, with Tokyo’s Nikkei 225 jumping 1.1% but South Korea’s Kospi falling 0.5 percent.
