© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 30, 2023. REUTERS/Brendan McDermid
By Stephen Culp
NEW YORK (Reuters) – The crept higher on Tuesday as investors awaited crucial inflation data and the unofficial kick-off of first-quarter reporting season.
The Dow joined the S&P 500 in positive territory with economically sensitive sectors such as industrials and materials providing upside momentum, while tech and tech-adjacent megacap shares dragged the Nasdaq into the red.
With a lack of market moving catalysts, investors looked ahead to Wednesday’s consumer price index (CPI) for any evidence that the long, slow inflation cooldown continues.
“You’re seeing renewed interest in cyclical stocks,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “There seems to be some interest in these stocks heading into tomorrow’s inflation report.”
On a monthly basis, analysts see headline and core CPI cooling to 0.2% and 0.4%, respectively. But year-on-year, while consensus estimates call for a significant drop in the headline number – to 5.2% from 6.0% – the core measure, which strips out volatile food and energy prices, is expected to gain heat, rising to 5.6% from 5.5%.
As inflation slowly returns to the Federal Reserve’s average annual 2% target, market participants are banking on a 70% likelihood of another 25 basis point interest rate hike at the conclusion of its May monetary policy meeting, according to CME’s FedWatch tool.
“(The) 25 basis point hike is probably going to happen, and is baked into stock prices,” Pavlik added. “How they position it for the next meeting is key, because so many people are expecting a downturn in the economy.
“The market could really react negatively to another rate hike after May.”
Beyond CPI, investors are eyeing first-quarter reporting season, which surges from the starting gate this Friday with results from three major banks, Citigroup Inc (NYSE:), JPMorgan Chase & Co (NYSE:) and Wells Fargo (NYSE:) & Co.
Analysts expect aggregate first-quarter S&P 500 earnings falling 5.2% year-on-year, a stark reversal from the 1.4% annual growth seen at the beginning of the quarter.
At 2:10PM ET, the rose 156.62 points, or 0.47%, to 33,743.14, the S&P 500 gained 10.23 points, or 0.25%, to 4,119.34 and the dropped 19.42 points, or 0.16%, to 12,064.94.
Among the 11 major sectors of the S&P 500, energy and materials were enjoying the biggest percentage gains, while communication services and tech were in the red.
Cryptocurrency-related shares such as Coinbase (NASDAQ:) Global Inc, Riot Platforms Inc and Marathon Digital Holdings Inc climbed between 8% and 17% as bitcoin broke through the $30,000 level for the first time in 10 months.
CarMax Inc (NYSE:) surged 10.4% after the used-car retailer posted a consensus-beating quarterly profit.
Drugmaker Moderna (NASDAQ:) Inc slipped 2.8% after the company said its closely watched flu vaccine failed to meet the criteria for “early success” in a late-stage trial.
Advancing issues outnumbered decliners on the NYSE by a 4.25-to-1 ratio; on Nasdaq, a 1.72-to-1 ratio favored advancers.
The S&P 500 posted eight new 52-week highs and no new lows; the Nasdaq Composite recorded 56 new highs and 86 new lows.
