4:13pm: Indexes fall in afternoon trading
The Dow closed Wednesday down 38 points, 0.1%, at 33,647, the Nasdaq Composite fell 103 points, 0.9%, to 11,929 and the S&P 500 dipped 17 points, 0.4%, to 4,092. The small-cap Russell 2000 index declined 12 points, 0.7%, to 1,775.
The Dow snapped a four-session winning streak and the benchmarks fell in the afternoon, as minutes from the Federal Reserve’s March policy meeting seemed to drive recession fears.
“Given their assessment of the potential economic effects of the recent banking-sector developments, the staff’s projection at the time of the March meeting included a mild recession starting later this year, with a recovery over the subsequent two years,” the meeting summary read.
Investors will be watching for PPI data due out tomorrow.
12.05pm: CPI rose just 0.1% in March
US stocks moved higher in noon trading following weaker-than-expected Consumer Price Index (CPI) data for March.
At midday, the Dow gained 75 points to 33,760, while the S&P 500 added 7 points at 4,116 and the tech-heavy Nasdaq rose 3 points to 12,035.
“It is encouraging because it shows the direction is the way the Fed wants it to go, but I don’t think it’s enough to cause the Fed to stop raising rates,” CFRA’s Sam Stovall said.
Notable movers included shares of Shopify Inc, which moved up nearly 4% after JPM analysts upgraded the stock to ‘Market Outperform’ from ‘Market Perform’, believing the company has big upside potential as it gains traction with larger enterprise businesses.
11:00am: Bank of Canada keeps key interest rate at 4.5%
The Bank of Canada (BOC) on Wednesday announced that it is leaving its key interest rate at 4.5% for the second consecutive month.
Economists widely expected the central bank would continue the pause on its rate hiking cycle, which began in March 2022, based on data that suggested inflation would keep declining, BNN Bloomberg reported.
The central bank’s governing council, though, warned it could increase rates again if necessary.
South of the border, US stocks had turned by midmorning, with the Nasdaq losing 0.4% and the S&P 0.1% below opening levels. The Dow was treading water to trade flat.
9:40am: Stocks lifted by inflation data
US stocks opened higher buoyed by a modestly cooler-than-expected inflation report for March.
Just after the market opened, the Nasdaq had added 77 points or 0.6% at 12,109 points, the S&P 500 was up 25 points or 0.6% at 4,134 points, and the Dow Jones had added 169 points or 0.5% at 33,854 points.
Precious metals were also lifted, with gold adding 0.8% at US$2,035.50 while silver was up 1.7% at US$25.62.
While March’s CPI report showed improvement, inflation remains far higher than the Federal Reserve’s target of 2% leaving investors to speculate over the central bank’s next move in terms of interest rate hikes.
Heading into the report, the market was pricing in a 70% probability of a 25 basis point rate hike in May. However, this had fallen slightly to 65% after the data was released, noted FOREX.com market analyst Fiona Cincotta.
“The market is increasingly confident that the Fed will be cutting interest rates aggressively by the end of the year,” Cincotta said.
“As a result, stocks are rising, led higher by the Nasdaq as high-growth tech stocks have the most to benefit from lower interest rates.”
8:40am: Price pressures easing
Inflation in the United States cooled further in March, with the consumer price index (CPI) rising 0.1% month-over-month after adding 0.4% in February.
For the 12 months to March, inflation rose 5% after adding 6% in February, marking the smallest 12-month increase since the period ending May 2021.
This was modestly better than the Street’s expectation of a 0.2% increase month-over-month and an annual increase of 5.1%.
The core CPI, which excludes food and energy, rose 0.4% month-over-month in March, down from a 0.5% increase in February, and 5.6% in the 12 months ending in March. Both of these measures were in line with analysts’ expectations per Bloomberg.
Shortly following the release of the data, futures for the Dow Jones were up 0.2%, the S&P 500 was up 0.1%, and the Nasdaq was flat in pre-market trading.
6.30am: Marking time
Wall Street is likely to open cautiously higher as investors await the release of March’s Consumer Price Index (CPI), due before the market opens, which will help guide the Federal Reserve’s next interest rate decision.
Futures for the Dow Jones Industrial Average (DJIA) rose 0.3% in Wednesday pre-market trading, while those for the broader S&P 500 index gained 0.2%, and contracts for the Nasdaq-100 added 0.1%.
Ahead of the inflation report, US stocks struggled to find direction on Tuesday, with the DJIA closing 0.3% higher at 33,685, while the S&P 500 ended flat at 4,109 and the Nasdaq Composite fell 0.4% to 12,032.
“More cyclical stocks such as industrials and materials held up well overall, with some weakness in what has been a burgeoning tech sector this year taking some shine from some early trading session strength,” commented Richard Hunter, head of markets at interactive investor. “The week now gets into full swing with the release of the Consumer Price Index later today. Estimates vary on the outcome of a release which will give the Federal Reserve further food for thought.”
Hunter noted that the general expectation is that the CPI will have increased by 0.2% in March, as compared to a gain of 0.4% in February, but the core inflation number – which excludes energy and food prices – is estimated to have risen by 0.4%, and by 5.6% year-on-year.
“Indeed, while it is clear that there is some cooling of the headline inflation number, attention is likely to turn to some of the underlying measures which have so far proved more difficult to budge, such as clothing, insurance and furnishings in addition to volatile energy and food levels.
“With this in mind, the consensus remains that victory in the fight against inflation has not yet been achieved and that the Fed will hike rates by a further 0.25% in May, especially given the recent spike in the oil price and little more than a moderate labour market slowdown," he added.