US stocks fall on CBI inflation data

U.S. stocks edged lower on Tuesday as investors bide their time until a key inflation report sheds light on the path forward for interest rates.

In morning trade, all three major indices reversed the previous session's gains. The Dow Jones Industrial Average (^DJI) moved down 0.7%, or more than 250 points. The benchmark S&P 500 (^GSPC) fell about 0.6%, while the tech-heavy Nasdaq Composite (^IXIC) fell roughly 0.3%.

Stocks were subdued ahead of the release of the consumer price index on Wednesday, seen as a key point for the market facing a slower next phase after a strong first quarter.

Investors are increasingly less confident the Federal Reserve will deliver three rate cuts this year, given the continued strength in the US economy. This has intensified the focus on the CPI axis for March, and any sign that inflation has started to cool again will be seen as a call for a June policy change.

Meanwhile, dim rate-cut hopes helped push the 10-year Treasury ( ^TNX ) yield near a five-month high — another potential headwind for stocks, with the 5% level seen as a major point of concern. The benchmark yield fell around 5 basis points to trade at 4.4% on Tuesday.

At the same time, rising metals prices have fueled concerns about a feed-through effect on inflation. Copper (HG=F), a key industrial input, was up about 0.7% in early Tuesday trading, prompting talk of a new bull market. Gold (GC=F) rose above $2,380 an ounce, extending its rally to hit another fresh record.

Another catalyst on the horizon is the start of the first-quarter earnings season, which kicks off in earnest on Friday with results from the likes of Citigroup ( C ), JP Morgan ( JPM ) and Wells Fargo ( WFC ).

live6 updates

  • Worried about the recession this year? This economist….

    Here's a word we haven't heard from economists in over a year: Depression.

    But the market could return to the discussion at some point this summer, especially if interest rates are not cut and remain high for a long time.

    I had a coffee chat with Visa's amazing economist Wayne Best at Yahoo Finance's NYC headquarters — and was very impressed with the work his team is doing on consumers.

    He showed me a chart his team recently created looking at this year's recession risks by state. California is one of the areas at risk (as are many others), Best explained, due in part to increases in hourly wages. Elevated interest rates may also be a contributor.

    Having said that, don't expect a slowdown tomorrow. Visa's data shows strong propensity to spend on travel and services in the coming months. This is a nuance that no one is talking about in the markets right now, so I want to use your radar today!

  • Stocks replace previous profits

    All three major indices reversed the previous session's gains on Tuesday – just ahead of Wednesday's crucial CPI report.

    The Dow Jones Industrial Average (^DJI) moved down 0.7%, or more than 250 points. The benchmark S&P 500 (^GSPC) fell about 0.6%, while the tech-heavy Nasdaq Composite (^IXIC) fell roughly 0.3%.

  • Are tariff reductions off the table?

    Markets expect two and a half 25 basis point cuts this year, up from six expected at the start of the year, according to Bloomberg data.

    As investors weigh the latest Fed talk and adopt a “higher for longer” interest rate mindset, a key question has arisen: Does the U.S. economy need rate cuts?

    “[The Fed] wants to cut rates, but the economy stands in its way,” Mizuho Securities USA chief economist Steven Ricciuto told Yahoo Finance Live early Tuesday. “The Fed is fighting the economy. In particular, they're fighting the American consumer, and that's a fight I don't want to get into.”

    Ricciuto, who does not expect the central bank to cut interest rates this year, said some risks are to the upside if interest rates remain unchanged.

    “If the Federal Reserve were to cut interest rates without the data to justify it, you could end up in an environment where the market starts to embed a 3% inflation psychology as opposed to a 2% inflation psychology,” he explained. “This shifts the fair value trading range of the 10-year note sideways.”

    The yield on the 10-year Treasury (^TNX) is currently near a five-month high, with the 5% level seen as a key point of concern.

    Ricciuto argued that if Treasury yields rise, “this is a real problem in terms of the outlook for the overall economy, because it will have significant negative effects on the ability of households to afford housing.”

  • U.S. stocks edge higher as investors await key inflation data

    US stocks rose on Tuesday as investors awaited key CPI data due on Wednesday morning.

    The benchmark S&P 500 (^GSPC) rose about 0.4%, while the tech-heavy Nasdaq Composite (IXIC) rose roughly 0.5%. The Dow Jones Industrial Average (^DJI) added 0.1%, or roughly 50 points.

    Meanwhile, fading rate-cut hopes helped push the 10-year Treasury ( ^TNX ) yield near a five-month high. The benchmark yield traded down about 3 basis points to 4.4% on Tuesday.

  • Teens control spending, but not everywhere

    According to Piper Sandler's latest 'Taking Stock' research this morning, teenagers are tightening their spending.

    The spring survey showed that teen “self-reported” spending fell 6% year-over-year to $2,263, up only 1% from the fall.

    The biggest category winner is cosmetics.

    Beauty spending hit its highest level since the spring of 2018, and Ulta ( ULTA ) CEO David Kimpel warned last week of an industry slowdown (which sent his stock price down). Elf Beauty ( ELF ) gained more market share compared to its competitors, survey shows.

    Teenagers keep their spending down.Teenagers keep their spending down.

    Teenagers keep their spending down. (Piper Chandler)

  • PC recovery continues

    PC makers Dell ( DELL ) and HP Inc. Consider shares of (HP) today.

    PC industry firm Canalys on Tuesday said total shipments of desktops and notebooks It grew 3.2% year-on-year to 57.2 million units In the first quarter. The research body says this is a sign of increased demand ahead of upcoming catalysts such as the arrival of AI PCs and the Windows 11 update later this year.

    “Growth in the first quarter of 2024 bodes well for a strong PC market throughout the year,” said Ishan Dutt, principal analyst at Canalys. “Vendors and the channel are working through some of the final stages of inventory revisions, and macroeconomic conditions in some markets continue to restrain demand. But the strength of the upgrade opportunity, particularly from businesses, is starting to come to the fore. As customers prioritize upgrades in preparation for the large-scale transition to Windows 11, market strength will continue to grow in the coming quarters.” Going from strength to strength.”

    System recovery continues.System recovery continues.

    System recovery continues. (canals)

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