US Stocks Fall Despite Moderate Inflation, Powell Speech Awaited


US stocks fell in choppy trading at noon on Wednesday, a day after the Dow Jones Industrial Average and S&P 500 snapped six-day winning streaks.

A report on US inflation showed investors have little to worry about, for now, and gave stocks a brief boost in early trading. The program for the day features a speech from Federal Reserve Chairman Jerome Powell on the state of the job market.

What are the main landmarks doing?
  • The Dow Jones Industrial Average DJIA,
    + 0.08%
    it was 26 points, 0.1%, lower, trading at around 31.348, reversing previous gains.

  • The S&P 500 SPX,
    -0.11%
    It fell 10 points, or 0.3%, to about 3,900.

  • The Nasdaq Composite was down 68 points, or 0.7%, near 13,939.

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Stocks saw little movement on Tuesday, with the Dow DJIA,
+ 0.08%
and S&P 500 SPX,
-0.11%
posting small losses to break a six-day winning streak for both indices, while the Nasdaq Composite COMP,
-0.18%
He made a small profit to capture another close record. The Russell 2000 Small Cap RUT,
-0.13%
outperformed its larger-cap siblings with a 0.4% gain to post another record as well.

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What drives the market?

Investors remain focused on the prospects for another big round of public spending, as well as the slowdown in new COVID-19 infections, along with the ongoing vaccine launch. At the same time, market watchers are scrutinizing January consumer price inflation data released Wednesday morning.

The US consumer price index rose 0.3% in January as expected, after rising 0.4% a month earlier, but excluding volatile food and energy prices, the underlying CPI it was unchanged against an expected increase of 0.1%. CPI inflation rose 1.4% in the last 12 months.

While leading economic indicators still don’t show evidence of inflation, commodity prices do, said Andrew Smith, chief investment strategist at Dallas-based Delos Capital Advisors. Raw materials such as CL.1 oil,
+ 0.72%,
construction timber
+ 1.03%,
and C00 corn,
-2.97%
all have soared higher in recent months and may start pinching Americans’ pockets soon, he said.

Still, Smith told MarketWatch: “We think we’ve made a good step in the market.” While valuations are high in all corners of the market, “we are finally seeing earnings growth,” he said.

In a separate report, the Census Bureau said that wholesale inventories increased 0.3% in December.

“Investors are already trying to anticipate when the US economy will experience overshoot inflation that is expected to be driven by more incoming fiscal stimulus,” said Han Tan, market analyst at FXTM, in a note.

“Such conditions could trigger the much-talked about Fed downsizing, which could pave the way for higher interest rates. More clues on that timeline would help global investors determine their allocations in stocks versus bonds, ”he said.

Investors were expected to pay little attention to Donald Trump’s second impeachment trial, with arguments set to open in the Senate on Wednesday afternoon. The Senate voted Tuesday that the trial could continue after a round of arguments over the constitutionality of trying a former president.

The test is not expected to affect financial markets, as it is not seen to interfere with a push toward another round of coronavirus aid spending. President Joe Biden is targeting a $ 1.9 trillion package and Democrats in Congress have taken steps that would allow them to push through a spending plan without the support of Republicans in the evenly divided Senate through a process known as reconciliation. budgetary. However, the size of the plan is expected to shrink a bit due to resistance from some Democrats.

Powell is scheduled to deliver his comments to the Economic Club of New York at 2 p.m. ET, and federal budget figures for January will be released at 2 p.m.

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What companies are in focus?
  • Actions of Coca-Cola Co.
    KO,
    + 0.04%
    it ticked up 0.3% after generating earnings and revenue on Wednesday morning that beat Wall Street expectations.

  • Actions of Twitter Inc.
    TWTR,
    + 7.90%
    It spiked at noon after the social media platform delivered its $ 1 billion second quarter Tuesday night.

  • Cisco Systems Inc.
    CSCO,
    -3.81%
    On Tuesday night it reported quarterly results that beat Wall Street estimates, although sales in certain segments were below expectations. Shares in the maker of network services, video conferencing tools and security software fell 4.1%.

  • Mattel Inc.
    MAT,
    -2.36%
    Shares fell 3.4% even after the toymaker beat Wall Street expectations for its fourth quarter and said it remained “mindful” of “volatility and other macroeconomic uncertainties” related to COVID.

  • Actions of Yelp Inc.
    YELP,
    -6.57%
    it also reversed early earnings to fall nearly 7% despite posting better-than-expected sales and earnings on Tuesday.

  • In deal news, shares of NIC Inc.
    EGOV,
    + 16.03%
    jumped 16.2% after the digital government payments and solutions company agreed to be acquired by Tyler Technologies Inc.
    TYL,
    + 6.90%
    in a cash settlement of $ 2.3 billion.

What are other markets doing?
  • The yield of the 10-year Treasury note TMUBMUSD10Y,
    1,137%
    it slid around 2 basis points to around 1,140%, having previously seen a key threshold at 1.2%. Yields and bond prices move in opposite directions.

  • The US dollar index ICE, DXY,
    -0.12%
    a measure of the currency against a basket of six major rivals, it fell 0.1% to about 90.38.

  • Oil futures rose in choppy trade, after a report showed lower reserves, with the US benchmark CL.1,
    + 0.72%
    up 0.6% at $ 58.71 per barrel. GC00 gold futures,
    + 0.29%
    they were 0.2% higher, near $ 1,839 an ounce.

  • The pan-European Stoxx 600 Europe SXXP index,
    -0.23%
    yielded 0.2% and London’s FTSE 100 UKX,
    -0.11%
    fell 0.1%.

  • In Asia, the SHCOMP composed of Shanghai,
    + 1.43%
    closed 1.4% higher, while Hong Kong’s Hang Seng HSI Index,
    + 1.91%
    increased by 1.9%, and Japan’s Nikkei 225 NIK,
    + 0.19%
    rose 0.2%.

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