U.S. Stocks Close Mostly Lower Ahead Of Inflation Data
After coming under pressure early in the session, stocks remained mostly lower throughout the trading day on Tuesday. The major averages all moved to the downside on the day after ending Monday’s trading narrowly mixed.
The tech-heavy Nasdaq slid 77.36 points or 0.6 percent to 12,179.55 and the S&P 500 fell 18.95 points or 0.5 percent to 4,119.17. The narrower Dow flirted with positive territory late in the session but closed down 56.88 points or 0.2 percent at 33,561.81.
Overseas weakness carried over onto Wall Street amid ongoing concerns about the outlook for the global economy following disappointing Chinese trade data.
Traders may also have been moving money out of relatively risky assets like stocks ahead of the release of key inflation data in the coming days.
The reports on consumer and producer price inflation, which are due to be released on Wednesday and Thursday, respectively, could have a significant impact on the outlook for interest rates.
Ahead of the data, CME Group’s FedWatch Tool is currently indicating an 76.5 percent chance the Federal Reserve will leave interest rates unchanged at its next meeting in June.
Fed Chair Jerome Powell said following last week’s rate hike that the central bank would take a “data-dependent approach” to future monetary policy decisions.
“The April CPI report is going to remind everyone that inflation is staying sticky,” said Edward Moya, senior market analyst at OANDA. “The Fed won’t be raising rates on a hot report, but it will justify calls that rates will stay higher for longer.”
The weakness on Wall Street may also have reflected concerns about the debt ceiling ahead of a meeting between President Joe Biden and House Speaker Kevin McCarthy, R-Calif.
McCarthy has called for any deal on raising the debt ceiling to include spending cuts and told NBC News earlier today he is not in favor of a short-term fix.
Overall trading activity remained relatively subdued, however, with a lack of major U.S. economic data keeping some traders on the sidelines.
Tobacco stocks showed a significant move to the downside on the day, dragging the NYSE Arca Tobacco Index down by 2.3 percent to its lowest closing level in well over five months.
Considerable weakness was also visible among semiconductor stocks, as reflected by the 1.9 percent slump by the Philadelphia Semiconductor Index.
Chipmaker Skyworks Solutions (SWKS) posted a steep loss after reporting better than expected fiscal second quarter results but providing disappointing guidance for the current quarter.
Chemical and networking stocks also saw some weakness on the day, while most of the other major sectors showed more modest moves.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Tuesday, although Japan’s Nikkei 225 Index bucked the downtrend and jumped by 1.0 percent. China’s Shanghai Composite Index slumped by 1.1 percent, while Hong Kong’s Hang Seng Index plunged by 2.1 percent.
Most European stocks also moved to the downside on the day. While the French CAC 40 Index slid by 0.6 percent, the U.K.’s FTSE 100 Index edged down by 0.2 and the German DAX Index closed nearly unchanged.
In the bond market, treasuries pulled back near the unchanged line after seeing initial strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, ended the day unchanged at 3.521 percent.
Trading on Wednesday is likely to be driven by reaction to the Labor Department’s report on consumer price inflation in the month of April.
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