Stocks finished mixed Thursday, with the Nasdaq closing at record high, as investors headed to tech stocks following yesterday's hotter-than-expected inflation report.
The Dow Jones Industrial Average slipped 2.43, or 0.01%, to 38,459.08, while the S&P 500 gained 0.74% to 5,199.06 and the tech-heavy Nasdaq gained 1.68% to 16,442.20, a record level.
Tech stocks lifted the S&P 500 and Nasdaq into the green, with Nvidia, Apple, and Amazon all ending higher.
The core PPI index quickened by 2.4% compared to last year, just ahead of Street forecasts, while the headline index edged higher, to 2.1%, just under market estimates.
Monthly readings were also softer than Wall Street forecasts.
“The inflation data are noisy, and the market reflects that reality," said Jamie Cox, managing partner for Harris Financial Group. "There are clear signs of disinflation in lots of places, but the last mile of the inflation fight is going to be the most difficult. The Fed will cut into the noise, but not until after June."
Updated at 1:13 PM EDT
Better bonds
The Treasury wrapped-up the third of three coupon auctions today with a $22 billion sale of re-opened 30 years bonds, drawing muted, but not terrible, interest from foreign investors.
Investors placed bids worth around $51.14 billion for the overall sale, generating a so-called 'bid-to-cover' ratio of 2.37, down from the 2.47 level recorded over a similar sale last month.
Foreign bidders, meanwhile, took down around 64% of the sale, a level that was around 5 percentage points south of last month's auction.
$SPY $QQQ | U.S. 🇺🇸 30-Year Bond Auction Results:
— Wall St Engine (@wallstengine) April 11, 2024
--> 1.0bps tail, the first tail since Nov '23 for the 30Y.
🔸High Yield Rate Climbs to 4.671% (Prev 4.331%)
🔸Bid-to-Cover Ratio at 2.37, slightly down from 2.47
🔸Direct Acceptance at 18.3%, up from 16.8%
🔸Indirect Acceptance…
Updated at 12:03 PM EDT
Bank on it
JPMorgan (JPM) shares edged lower in mid-day trading, but are still one of the best-performing bank stocks of the year, heading into the lender's first quarter earnings report prior to the start of trading on Friday.
Analysts are expecting the biggest U.S. bank to post earnings of $4.15 er share, down 4% from last year, on revenues of around $41.81 billion.
Related: JP Morgan's stock hinges on one key metric in its earnings report
Updated at 10:41 AM EDT
More yields, please
Bond markets are back in a funk Thursday, with 10-year note yields rising to a fresh six-month high of 4.584%, as investors continue to both re-price Fed rate forecasts while bracing for a $22 billion 30-year auction later in the session.
Yesterday's bond market slump, which included the biggest one-day gain for 10-year yields in more than 18 months, was partly triggered by weak demand in the Treasury's sale of re-opened notes, which forced dealers to hold onto 24% of the $39 billion offering.
US 10-year Treasuries are having their worst day since May 2023, with yields surging after the one-two punch of a hot CPI and a bad auction. @pboockvar: "10 yr auction was bad...Dealers were left with 24% of the auction, which is the most since Nov. 2022." pic.twitter.com/bPiQPP6NE4
— Lisa Abramowicz (@lisaabramowicz1) April 10, 2024
Updated at 10:08 AM EDT
Soft start
The S&P 500 was marked 6 points lower, or 0.12%, in the opening half hour of trading, with the Dow down 136 points and the Nasdaq up 40 points, or 0.25%, thanks in part to early gains for Nvidia (NVDA) and Meta Platforms (META)
S&P 500 Opening Bell Heatmap (Apr. 11, 2024)$SPY +0.17% 🟩$QQQ +0.31% 🟩$DJI +0.02% 🟩$IWM +0.37% 🟩 pic.twitter.com/9nfUfvMTq7
— Wall St Engine (@wallstengine) April 11, 2024
Updated at 8:38 AM EDT
Factory inflation easing
The Commerce Department's March report on producer price inflation, which, alongside yesterday's CPI data feeds into the Fed's preferred PCE inflation gauge, eased modestly on the month but remained elevated on an annual basis.
The core PPI index quickened by 2.4% compared to last year, just ahead of Street forecasts, while the headline index edged higher, to 2.1%, just under market estimates. Monthly readings were also softer than Street forecasts.
Stocks were modestly higher following the data release, with the Nasdaq turning positive and the S&P 500 paring its pre-market decline to around 4 points.
But Core PPI YoY not so great. 2.4%
— Mike Zaccardi, CFA, CMT 🍖 (@MikeZaccardi) April 11, 2024
Highest since Aug last year pic.twitter.com/1Lp704M7do
Updated at 8:21 AM EDT
ECB rate cut hints
The European Central Bank held its key refinancing rate unchanged at a record high 4.5% following a two-day policy meeting in Frankfurt, but hinted at a potential reduction in June as inflation pressures in the world's biggest economic bloc continue to ease.
"If the Governing Council’s updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission were to further increase its confidence that inflation is converging to the target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction," the ECB said in a statement.
The euro fell 0.2% to 107.16 against the U.S. dollar, the lowest since February 14, immediately following the ECB rate decision.
🇪🇺ECB guidance updated:
— Frederik Ducrozet (@fwred) April 11, 2024
- staff projections ✅
- core inflation dynamics ✅
- policy transmission ✅
The ECB should and will likely cut rates in June. pic.twitter.com/c6HPjJrBbw
Stock Market Today
Stocks ended sharply lower Wednesday, with the S&P 500 slumping nearly 50 points by the close of trading, following a March inflation report from the Commerce Department that showed faster-than-expected price pressures at both the headline and core level.
The reading, the third consecutive month that showed inflation topping Wall Street forecasts, triggered a wholesale repricing in both the bond and interest-rate markets, with 10-year notes rising the most since September 2022 to end the session at 4.546%.
Benchmark 2-year notes, which are the more sensitive to interest-rate changes, added 23 basis points to close at 4.956% as traders reset expectations for Federal Reserve rate cuts amid concern that inflation pressures are likely to remain elevated well into the summer.
"Overall, the strong inflation data at a minimum takes the June rate cut off the table for the Fed and should force the Fed to go back to the drawing board with regards to their monetary policy ambitions for the year," said Charlie Ripley, senior investment strategist for Allianz Investment Management in Minneapolis.
"The next potential opportunity for a rate cut is likely not going to be until after the summer and given the trajectory of the economy, the uncertainty around monetary policy is going to remain high for the foreseeable future," he added.
CME Group's FedWatch is now pricing in just two rate cuts this year, with the first coming in September, a move that would mark the longest stretch from the last rate hike to the first rate cut on record.
The U.S. dollar index reflected that change with its biggest single-day gain in more than a year and was last marked 0.05% higher against its global peers at 105.292. That level was last seen in early November.
Related: Hot inflation report batters stocks; here's what happens next
Stocks look set for another leg lower at the start of trading, although investors are likely to first focus on the Commerce Department's reading of factory-gate, or wholesale, inflation, expected at 8:30 a.m. U.S. Eastern Time. Weekly jobless claims data are due at the same time.
Futures contracts tied to the S&P 500, which is now down 1.78% for the quarter, suggest an opening-bell decline of around 17 points, with the Dow Jones Industrial Average called 120 points lower.
The tech-focused Nasdaq, meanwhile, is priced for a 40-point decline following last night's 136-point slump.
In other markets, global oil prices held onto the $90-per-barrel mark in overnight trading amid concern about an escalation of the military conflict in the Middle East. Bloomberg reported on April 10 that U.S. officials believed that an Iranian strike on Israeli targets was imminent.
Brent crude contracts for June delivery, the global pricing benchmark, were steady at $90.44 per barrel while WTI contracts for May slipped 51 cents to $85.70 per barrel.
In overseas markets, the European Central Bank will hold its April policy meeting later today in Frankfurt, with markets betting on no change to its key deposit rate but also expecting a hint towards rate cuts in June.
More Wall Street Analysts:
- Analyst unveils Nvidia stock price 'line in the sand'
- Analyst revamps homebuilder stock price target before Fed rate call
- Analysts revamp Nvidia price targets as Blackwell tightens AI market grip
The Stoxx 600 was marked 0.32% lower in midday trading, while the FTSE 100 fell 0.23% in London.
Overnight in Asia, Japan's Nikkei 225 ended 0.35% lower as the yen drifted to a fresh 34-year low of 153.24 against the U.S. dollar, reviving speculation of government intervention into the currency markets.
The regionwide MSCI ex-Japan index, meanwhile, was marked 0.43% lower into the close of trading.
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