Equities are rising as investors weigh new inflation data

US equities parried gains to fall into the last hour of trading as investors rated new inflation data from Washington, which showed that prices in March further accelerated to a new 40-year high.

The S&P 500 retreated to a 0.2% drop and the Dow ticked below the flat line. The Nasdaq Composite faltered after jumping earlier in the session. Meanwhile, government interest rates fell slightly, but the benchmark 10-year interest rate remained above 2.7%, the highest level since January 2019.

The movements follow a downward day on Wall Street to start the week marked by growing concerns about an economic downturn as the war in Ukraine, COVID-19 lockdowns in China and the prospect of a more aggressive Federal Reserve weigh on the mood. Investors are looking forward to the start of the earnings season and more financial datasets for release in this holiday-shortened trading week.

Markets weigh the latest inflation gauge in the US. The Bureau of Labor Statistics (BLS) consumer price index (CPI) rose 8.5% in March compared to the same month last year, according to the latest report released on Tuesday. The figure marks the fastest increase since December 1981 and follows an annual increase of 7.9% in February. On the way into the report, consensus economists were looking for a jump of 8.4% for March, according to Bloomberg data.

The red-hot print comes as investors struggle with the likelihood that Fed officials will act more aggressively to fight inflation, after a hawkish reading of minutes last week from the central bank meeting in March suggested that “many” politicians “would have preferred a 50 basis point increase “in benchmark interest rates last month.

“I think the Fed is already committed to an aggressive rate hike,” Charles Schwab’s global investment strategist Jeffrey Kleintop told Yahoo Finance Live on Monday. Tuesday’s CPI data “may not have much of an impact [on the markets] as it could have been a few months ago. “

Although investors are largely prepared for the likelihood that the Fed’s policy makers will be more belligerent in their anti-inflationary efforts, concerns have emerged that an increase in monetary tightening could cause an economic downturn. Strategists have begun to discuss the possibility of a recession more widespread in recent weeks, particularly with economists at Deutsche Bank, who recently warned that central bank measures could slow growth significantly in the second half of 2023.

Some have said that it is too early to make such a call, but that the opportunity is on the table.

“I would say it’s probably closer to a coin toss that the economy will move into recession by the end of the year,” said Dreyfus and Mellon chief economist and macro strategist Vince Reinhart on Yahoo Finance Live.

12:39 ET: JPMorgan stock has fallen nearly 16% from year to date

JPMorgan is the first megabank to reveal first-quarter results on Wednesday as it launches its earnings season. Analysts estimate that the company will report earnings per share (EPS) of $ 2.72 according to Bloomberg consensus estimates.

Financial accounts have lagged the wider market significantly year-to-date due to concerns about U.S. banking ties to Russia and concerns about an economic downturn. In its most recent annual letter to shareholders, JPMorgan CEO Jamie Dimon warned that the bank is capable of losing as much as $ 1 billion over time as a result of the war.

Although the major bank said it was not concerned about its direct exposure to Russia, the institution is concerned about the “secondary and security effects” that the crisis and sanctions pose to so many companies and countries.

Shares of JPMorgan fell slightly in intraday trading by 0.3% to $ 132.64 per share. pieces from kl. 12:37 ET. The stock has fallen 15.8% year to date.

12:18 ET: Lululemon climbs after expanding trade-in and resale program

Shares of sportswear retailer Lululemon (LULU) rose as much as 6% to the highest intraday level since January 3 after an announcement that the company will expand its trade-in and resale program “Lululemon Like New” nationwide.

Lululemon Like New will be available to customers across the United States from Earth Day, April 22, following a successful pilot in two states in 2021. The retailer will reinvest 100% of its profits to support its Impact Agenda, including making 100% of the products with sustainable materials and end-use solutions by 2030.

LULU rose 4.4% to $ 384.80 per share. share from kl. 12:14 ET, likely amplified by an update in the broader markets after CPI data came in less severe than expected, with the core figure coming just below consensus figures.

The S&P 1500 Consumer Discretionary Index rose as much as 2.4 per cent.

9:30 ET: Equities push forward despite a report showing red-hot inflation in March

Here were the main movements in the markets during Tuesday’s opening clock:

  • S&P 500 (^ GSPC): + 28.07 (+ 0.64%) to 4,440.60

  • Dow (^ DJI): +100.67 (+ 0.29%) to 34.408.75

  • Nasdaq (^ IXIC): +162.91 (+ 1.21%) to 13,574.87

  • raw (CL = F): + $ 4.36 (+ 4.62%) to $ 98.65 per barrel

  • gold (GC = F): +25.20 USD (+1.29%) to 1,973.40 USD per. ounce

  • 10-year Treasury (^ TNX): -6.1 bps to give 2.7190%

8:35 AM ET: March CPI rose more than expected 8.5% year over year

U.S. consumers paid more for a range of goods and services in March compared to the previous month, as price levels across the economy continued to accelerate amid persistent supply and demand disruptions.

The Bureau of Labor Statistics (BLS) consumer price index (CPI) rose 8.5% in March compared to the same month last year, according to the latest report released on Tuesday. It marked the fastest increase since December 1981. This followed an annual increase of 7.9% in February. On the way into the report, consensus economists were looking for a jump of 8.4% for March, according to Bloomberg data.

With definite signs of a peak not yet seen in inflation, members of the Federal Reserve have escalated their rhetoric about using monetary policy tools to bring down rapidly rising prices. Last week, Fed Governor Lael Brainard said reducing inflation was “our most important task,” while San Francisco Fed President Mary Daly said high inflation was “as harmful as not having a job.”

7:10 ET: Contracts for S&P 500, Dow and Nasdaq flat while investors await CPI printing

Here’s how the main indices performed in futures trading ahead of Tuesday’s opening clock:

  • S&P 500 futures (ES = F): +1.25 points (+ 0.03%) to 4,410.25

  • Dow futures (ÅM = F): -1.00 points (-0.00%) to 34,218.00

  • Nasdaq futures (NQ = F): +14.25 points (+ 0.10%) to 14,014.25

  • raw (CL = F): + $ 3.81 (+ 4.04%) to $ 98.10 pr. barrel

  • gold (GC = F): + $ 10.30 (+ 0.53%) to $ 1,958.50 pr. ounce

  • 10-year Treasury (^ TNX): +0.00 bps to give 2.7800%

6:40 ET: The mood of small American businesses is declining as inflation concerns rise

Confidence levels among small business owners across the country fell further in March, with a higher number of parent and pop-shop operators reporting inflation as their main concern, a survey showed on Tuesday.

The National Federation of Independent Business said their Small Business Optimism Index fell 2.4 points to 93.2 last month to mark the third consecutive month with readings below the 48-year average of 98. The index has fallen every month in years so far.

Of those surveyed, 31% identified inflation as their main problem, an increase of 5 points compared to the February survey. The figure is the largest proportion of participants, citing inflation as their biggest concern since the first quarter of 1981, and also replacing concerns about “work quality” as the biggest problem for small businesses.

High inflation caused by shortages, massive fiscal stimulus and low interest rates have put pressure on the economy in recent months.

18:10 ET Monday: Stock futures change slightly ahead of Tuesday’s inflation data

Here’s where the markets traded ahead of Monday night’s session:

  • S&P 500 futures (ES = F): +2.75 points (+ 0.06%) to 4,411.75

  • Dow futures (ÅM = F): +29.00 points (+ 0.08%) to 34,248.00

  • Nasdaq futures (NQ = F): + 9.75 points (+ 0.07%) to 14.009.75

  • raw (CL = F): + $ 0.97 (+ 1.03%) to $ 95.26 per barrel

  • gold (GC = F): + $ 9.30 (+ 0.48%) to $ 1,957.50 pr. ounce

  • 10-year Treasury (^ TNX): +6.7 bps to give 2.7800%

A trader works on the trading floor of the New York Stock Exchange (NYSE) in Manhattan, New York City, USA, April 11, 2022. REUTERS / Andrew Kelly

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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