Wall Street wavers ahead of key inflation data

  • Reuters
  • Stock Market News
Wall Street wavers ahead of key inflation data
Credit: © Reuters.

By Amruta Khandekar and Bansari Mayur Kamdar

(Reuters) -Wall Street's main indexes were mixed on Tuesday as investors awaited a crucial inflation report and other economic data that would offer further clues on the timing of rate cuts from the Federal Reserve and guide investor expectations.

Market focus is back on the Fed's monetary policy path after a frenzy around artificial intelligence in the previous week that pushed the S&P 500 and Dow Jones industrials to new peaks and eclipsed concerns about delayed rate cuts.

The highlight for this week will be the release of January's personal consumption expenditures price index (PCE)- the Fed's preferred inflation gauge - on Thursday.

If the PCE reading hints at sticky inflation, like recent data on consumer and producer prices, it could impact the Fed's monetary policy and prompt traders to further push back their bets on the timing of rate cuts this year.

Currently, 65.6% of traders expect the Fed to start cutting rates by June, down from nearly 98% at the end of January, according to the CME Group's (NASDAQ: CME ) FedWatch tool. Bets for a July rate cut stand at 84.8%.

Jitters ahead of the PCE data have been weighing on markets in the last few sessions, said Kim Forrest, chief investment officer at Bokeh Capital Partners.

"We're trying to see what the Fed is going to do, and if we really have inflation, is inflation still growing or is it shrinking?"

Reports on gross domestic product (GDP), jobless claims and manufacturing activity, which are due this week, will further help in determining the state of the economy.

U.S. consumer confidence retreated in February after recording gains for three straight months, and orders for long-lasting U.S. manufactured goods fell more than expected in January, data showed on Tuesday.

Investors will also look forward to comments this week from some Fed policymakers, including voting members Atlanta Fed President Raphael Bostic, New York Fed chief John Williams and Fed Board Governor Christopher Waller.

At 11:38 a.m. ET, the Dow Jones Industrial Average was down 178.68 points, or 0.46%, at 38,890.55, the S&P 500 was down 4.66 points, or 0.09%, at 5,064.87, and the Nasdaq Composite was up 18.07 points, or 0.11%, at 15,994.33.

Seven of the 11 major S&P 500 sectors were in the red, led by energy, which slipped 0.4%, while utilities were top gainers with an advance of 1.5%.

The small-cap Russell 2000 index rose 1.3%.

Aiding the tech-heavy Nasdaq, Tesla (NASDAQ: TSLA ) outperformed megacap peers with a 1.4% rise.

Viking Therapeutics surged 93.7% after its experimental drug to treat obesity helped patients achieve "significant" weight loss in a mid-stage study.

U.S. drugmaker Amgen (NASDAQ: AMGN ), which is also developing a weight-loss drug, dropped 2.6%, pressuring the Dow Jones.

Norwegian Cruise Line Holdings (NYSE: NCLH ) advanced 18.3% as it forecast first-quarter profit above Wall Street estimates.

© Reuters. FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., February 23, 2024.  REUTERS/Brendan McDermid/File Photo

Advancing issues outnumbered decliners by a 1.82-to-1 ratio on the NYSE and by a 1.90-to-1 ratio on the Nasdaq.

The S&P index recorded 34 new 52-week highs and no new lows, while the Nasdaq recorded 126 new highs and 41 new lows.

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