Stocks are modestly higher ahead of Wednesday’s consumer price inflation report, in line with the sentiment seen in the past couple of sessions. A tamer inflation data could offer a temporary reprieve to the market, helping the averages break out of the recent lackluster phase.
On the contrary, if the numbers disappoint to the upside, the market’s resilience could be put to test.
Cues From Tuesday’s Trading:
The U.S. stock market ended Tuesday's session mixed, with tech stocks once again experiencing weakness. Most traders moved to the sidelines ahead of the key inflation data. The weakness was to some extent mitigated by the strength seen in energy, financial, material and IT services spaces.
The Dow Industrials hovered in positive territory throughout the session but ended off the highs of the day, while the S&P 500 Index and the Nasdaq Composite ended the session lower.
| Index | Performance (+/-) | Value | |
|---|---|---|---|
| Nasdaq Composite | -0.43% | 12,031.88 | |
| S&P 500 Index | +0.0% | 4,108.94 | |
| Dow Industrials | +0.29% | 33,684.79 |
Analyst Color:
The March “CPI print will go a long way toward helping the Fed calibrate its posture at the May FOMC meeting, assuming no further unpleasant surprises from the banking industry or otherwise,” said Daniel Berkowitz, investment director at Prudent Management Associates.
The next key catalyst would be the first-quarter earnings, the analyst suggested. Expectations are muted with the consensus calling for a 6.8% year-over-year drop, which would mark the largest quarterly drop since the onset of the pandemic, he said.
Berkowitz expects investors to focus on the impact of tighter lending conditions, big tech earnings and the extent to which inflation and rising interest rates continue to take a bite out of profits.
“On the bright side, because general expectations for earnings are down in the dumps, even modest positive news embedded in reports could put more wind in the sails of 2023’s market turnaround,” he added.
Futures Today
| Index | Performance (+/-) | |
|---|---|---|
| Nasdaq 100 Futures | -0.15% | |
| S&P 500 Futures | +0.18% | |
| Dow Futures | +0.21% | |
| R2K Futures | +0.34% |
In premarket trading on Wednesday, the SPDR S&P 500 ETF TrustSPY rose 0.19% to $410.51 and the Invesco QQQ TrustQQQ moved up 0.14% to $316.27, according to Benzinga Pro data.
Upcoming Economic Data:
The Mortgage Bankers Association will release the weekly application volume data at 7 a.m. EDT. Data for the week ended March 31 showed application volume falling 4.1% week-over-week, snapping a four-week gaining streak.
The Bureau of Labor Statistics is scheduled to release the consumer price inflation report for March at 8:30 a.m. EDT. Economists, on average, expect a 0.2% month-over-month increase and a 5.1% year-over-year rise in the headline index. This compares to February's growth of 0.4% and 6%, respectively.
The monthly core CPI rate is expected at 0.4%, slower than 0.5% in February. The annual core rate may have accelerated slightly from 5.5% to 5.6%.
The Energy Information Administration will release the oil inventory report for the week that ended April 7 at 10:30 a.m. EDT.
The Cleveland Federal Reserve is due to release its consumer price index for March at 11 a.m. EDT.
The Treasury will auction 10-year notes at 1 p.m. EDT.
The Federal Reserve is scheduled to release the minutes of its March 21-22 rate-setting meeting at 2 p.m. EDT.
See also: Best Futures Trading Software
Stocks In Focus:
- National Instruments Corp. NATI rose close to 4% in premarket trading after Reuters said Emerson Electric Co. EMR is close to buying the former for about $8 billion.
- Apogee Enterprises, Inc. APOG and Bed Bath & Beyond, Inc. BBBY are among the notable companies reporting quarterly results ahead of the market open.
Top Analysts’ Call
- Goldman Sachs Group, Inc. GS: UBS upgrades from Neutral to Buy
- Shopify, Inc. SHOP: JMP Securities upgrades from Market Perform to Market Outperform with $65 price target
- MongoDB, Inc. MDB: Morgan Stanley upgrades from Equal-Weight to Overweight and ups price target from $230 to $270
- Las Vegas Sands Corp. LVS: Roth MKM initiated with Buy rating and $74 price target.
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures were higher for a second straight day. The commodity tacked on 0.27% to $81.75 in early European trading on Wednesday, adding to the 2.24% rally on Tuesday.
The yield on the benchmark 10-year U.S. Treasury note was 3.445%, up 0.011 percentage points.
The Asian markets closed Wednesday’s session on a mixed note, although the overwhelming sentiment was one of caution. Traders looked ahead to the U.S. inflation data for cues on the Fed’s May rate decision.
European stocks started higher and have gained further ground in late-morning trading.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.