Stocks were mostly a shade lower Tuesday morning, though the tech-heavy Nasdaq Composite held on to a small gain as investors remained wait-and-see mode ahead of another round of inflation data later in the week.
What are major indexes doing?
On Monday, the Dow fell 126.15 points, or 0.4%, to end at 34,630.24 after trading above its all-time closing high of 34,777.76 set on May 7. The S&P 500 fell 0.1%, but remains just 0.1% away from its record close, while the Nasdaq Composite edged up 0.5%.and the small-cap Russell 2000 RUT rose 1.4%.
What’s driving the market?
Stocks have been stuck in a trading range for several weeks, with the Dow and S&P 500 index trading not far off all-time highs, as investors look for a fresh catalyst and await data on inflation pressures.
The market is behaving like a sailboat caught between a strong wind and fast-moving current, said Barry James, president and chief executive of James Investment.
“We have the wind at our tail — the stimulus, the Fed, the economy coming back and earnings in Q1 that were spectacular — but there is a current that, I think, is holding us back,” he said, in a phone interview.
The current consists of aggressive share issuance and aggressive selling by insiders as well as the shift in leadership away from the big tech stocks that had powered earlier gains, a development that will be positive over the long run, he said.
“The current won’t be against us all the time…today is just another day in that conflict,” James said.
The release Thursday of the May consumer-price index is shaping up to be the main data event of the week. A hotter-than-expected read on the April CPI, which rose 4.2% year over year, temporarily rattled markets last month.
“In our view, the fact that underlying inflationary pressures are rising as well raises questions as to whether the spike in headline inflation is due to transitory factors, as the Fed initially supported,” said Charalambos Pissouros, senior market analyst at JFD Group, in a note.
“Now, with several policy makers arguing that they need to start discussing policy normalization at the upcoming gatherings, further acceleration in consumer prices may increase speculation for the committee acting sooner than previously thought, and thereby result in a pullback in equities and other risk-linked assets,” the analyst said.
Treasury yields were slipping Tuesday with the fall in yields is seen as a positive for technology and other growth-related stocks.
U.S. stock futures extended declines in premarket Tuesday after an internet outage took down several major sites, but bounced off session lows after reports tied the outage to a glitch at cloud-computing services provider Fastly Inc. FSLY. Fastly said on its website that it had identified the issue and a “fix is being implemented,” shortly before 7 a.m. Eastern. Fastly shares were up 6.7% after dipping in premarket action.
Job openings in the U.S. soared to 9.3 million in April from a revised 8.3 million in the prior month, the Labor Department said Tuesday. The data underlines concerns about employers inability to fill jobs despite unemployment that remains high as a result of the COVID-19 pandemic.
A closely followed U.S. small-business index fell slightly in May, coming in 0.2 point lower at 99.6, to mark the first decline of the year, according to the National Federation of Independent Business. The fall came as small-business owners said they are losing sales because they can’t find enough people to fill open jobs. And now rising inflation is adding to their worries.
April data released Tuesday morning showed the U.S. international trade deficit narrowed to $68.9 billion from a record $75 billion a month earlier. Economists surveyed by Dow Jones Newswires and The Wall Street Journal had looked for a consensus $69 billion gap.
Data on April job openings will be closely watched amid concerns over difficulties employers are reporting in filling positions. The data is due at 10 a.m., with economists looking for openings to rise to 8.2 million from 8.1 million in March.
Which companies are in focus?
What are other markets doing?