4:05pm: Wall Street loses gains at the close on highest inflation numbers in years
Stocks pared gains at Tuesday's close after investors digested new inflation data that showed prices in March climbed to a new 40-year high.
The Dow fell around 88 points, or 0.3%, to close at 34,220, while the S&P 500 lost 0.3% after previously rising as much as 1.3%, while the Nasdaq also ended 0.3% lower.
12.05 pm: Nasdaq climbs as much as 1.5% to lead the advance
US stocks rose sharply in noon trading as the core consumer price index (CPI) in March increased at a small-than-expected 0.3%, although it was up 6.5% on an annual basis.
At midday, the Dow gained 220 points to 34,528, while the S&P 500 added 37 points at 4,449 and the tech-heavy Nasdaq climbed 160 points to 13,572.
“It’s a red hot number but the market’s reaction for now suggests it is priced in, especially with the month over month core read coming in below expectations,” E-Trade managing director of investment strategy Mike Loewengart said.
“The big debate is whether elevated reads like these are the new normal, or if we’re beginning to see a light at the end of the inflationary tunnel,” Loewengart added.
Energy stocks also powered higher as the West Texas Intermediate crude price surged nearly 7%.
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9.45am: US shares start higher
US shares rebounded on Tuesday as inflation data was not as high as had been expected.
In early New York deals, the Dow Jones Industrial Average added around 117 points at 34,425, while the S&P 500 added around 29 points at 4,442.
The tech laden Nasdaq index gained around 152 points to stand at 13,564.
For March this year, a consumer prices report showed inflation, not including food and energy costs (namely, the core CPI), was slightly less than had been expected.
It increased 0.3% of the month but that was reportedly below the consensus economist estimate from Dow Jones of 0.5%. Core prices on an annual basis were up 6.5%.
On interest rates, the 10-year Treasury yield also pulled back from the recent three-year high following the inflation report.
6.30am: Mixed open predicted
US stocks are poised to open mixed on Tuesday ahead of US inflation numbers for March which are expected to show a sharp increase from the corresponding month a year ago.
While the hawkish tone struck by the Federal Open Market Committee (FOMC) at its March meeting indicates a path of higher interest rates in the world’s biggest economy, spiraling inflation will add to fears that inflation-busting rate hikes may dent economic growth further out.
Futures for the Dow Jones Industrial Average were down 0.08% in pre-market trading, while those for the S&P 500 were 0.06% lower and contracts for the tech-heavy Nasdaq-100 rose 0.07%.
“All eyes are on US inflation data today. Investors feel the heat before today’s inflation print,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “CPI figure at or ideally below expectations could cool down the recent selloff, but a figure above expectations will likely further boost the Fed hawks and weigh on the equity appetite.”
The headline US consumer price figure was 7.9% in February and that figure may be surpassed in March, with some estimates suggesting a figure as high as 8.5%,
“There is a chance that we see a higher print on the back of higher energy and commodity prices, rising wages and rising rents,” added Ozkardeskaya.
The US inflation data is due at 8.30 am ET.
In March, the FOMC raised interest for the first time since 2018. The minutes of that meeting showed that most officials had agreed that “one or more" 50 basis-point increases may be the right course of action to dampen inflation. The latest inflation figures will likely solidify rate hike expectations but whether a series of increases work to reduce price pressures remains to be seen.
“How fast the Fed could bring down inflation that is mostly caused by supply-side problems, by restricting demand, and how will the rising inflation and the rising rates to tame inflation will impact the market?” said Ozkardeskaya.
Elsewhere, gold, a safe haven in times of uncertainty, continued higher. Gold futures were up 0.5% at $1958.40. Benchmark Brent crude futures were up 3.5% at $101.92 while WTI futures were up 3.3% at $97.40, signaling that elevated commodity prices are going to be a mainstay for now.
Contact the author at stephen.gunnion@proactiveinvestors.com