Stocks finished lower Thursday following a trio of key economic releases that have added to the current inflation puzzle.
The Dow Jones Industrial Average finished down 0.35% to 38,905.66, while S&P 500 lost 0.29% to 5,150.48 and the tech-heavy Nasdaq slipped 0.30% to 16,128.53.
February’s producer price index and retail sales data missed estimates.
Jeffrey Roach, chief economist for LPL Financial. said that this marked the fourth consecutive time the previous month’s estimate was revised downward.
"The consumer has a bit more capacity to spend but the consistent downward revisions should tell us the economy is slowing," he said. "A helpful indicator to watch in the coming months is auto sales. If the economy is truly slowing, expect to see vehicle inventories swell and dealers offer more incentives."
Quincy Krosby, LPL Financial's chief global strategist, said “the hotter than expected PPI print indicating that wholesale prices are edging higher could put more pressure on equity markets going into the March 20 Fed meeting.”
Updated at 12:38 PM EDT
GDPDown
Stocks are down, but are holding earlier losses in check despite outsized moves in the bond market that have 10-year notes testing 4.3% for the first time since late February.
The latest update of the Atlanta Fed's GDPNow forecasting tool, meanwhile, suggests modest downward revision to the current quarter growth rate, a move that could placate at least some of the market's recent inflation concerns.
The S&P 500 was last marked 12 points lower, or 0.23%, while the Dow was off 65 points and the Nasdaq down 37 points.
GDPNow model from @AtlantaFed Fed now at +2.3% (q/q ann.) for 1Q2024 ... as of this morning, consumer spending's contribution has been reduced; net exports only component subtracting from growth pic.twitter.com/VMB82woheq
— Liz Ann Sonders (@LizAnnSonders) March 14, 2024
Updated at 11:28 AM EDT
Big bonds moves
Treasury yields showing some big moves Thursday, with benchmark 10-year notes rising 10 basis points to 4.288% following the hotter-than-expected PPI data and solid, but slowing, retail sales tally. Benchmark 2-year notes, meanwhile, were up 7 basis points to 4.697%.
A stronger-than-expected reading for weekly jobless claims, which fell to 209,000 over the period ending on March 9, added to a complex picture of resilient job market, fading consumer strength and sticky inflation pressures.
🇺🇸PPI today is confirming what the CPI said on Tuesday: inflation is sticky.
— Althea Spinozzi (@Altheaspinozzi) March 14, 2024
PPI 1.6% yoy, exp 1.2%
PPI Core 2% yoy, exp 1.9%
oh... jobless and continuing claims are pointing to a strong job market.
The DOT plot next week is key🗝️
Updated at 9:59 AM EDT
Red start
Stocks are now falling sharply following the PPI inflation data and retail sales miss, with the S&P 500 marked 18 points lower, or 0.36%, in the opening half hour of trading.
The Dow, meanwhile, was marked 92 points lower while the Nasdaq slipped 67 points.
Treasury yields are also on the move, with 2-year notes rising 5 basis points on the session to 4.679% and 10-year notes pegged 7 basis points higher at 4.271%.
The probability of a June rate cut has moved below 60% after the higher-than-expected CPI/PPI reports. A week ago this probability was 74% and a month ago it was 82%. pic.twitter.com/9W01oWU96G
— Charlie Bilello (@charliebilello) March 14, 2024
Updated at 9:44 AM EDT
Under Water
Under Armour (UAA) shares slumped firmly lower in early trading following the sportswear group's decision to bring back founder Kevin Plank as CEO, replacing the outgoing Stephanie Linnartz.
Plank, who founded Under Armour in 1996, left the group in May of 2021 just weeks before the group revealed that it was co-operating with investigations from both the Securities and Exchange Commission and the U.S. Department of Justice into the company's revenue recognition accounting.
Under Armour shares were marked 10.6% lower in early trading to change hands at $7.21 each.
Updated at 9:22 AM EDT
Steely resolve
U.S. Steel (X) shares extended their two-day decline Thursday, falling 5.75% in pre-market trading following multiple reports that suggest President Joe Biden will push to prevent Japan's Nippon Steel from buying the Pittsburgh-based group.
Both Reuters and the Associated Press have said Biden will express his views to Prime Minister Kishida Yuko ahead of a planned State Visit next month at the White House.
Related: US Steel soars on $15 billion Nippon Steel takeover; United Steelworkers slams deal
Updated at 8:52 AM EDT
Clear as mud
Retail sales rebounded last month, but the overall tally of $700.7 billion missed Street forecasts and suggests the recent uptick in inflation could be holding back discretionary spending.
A separate reading of factory inflation, meanwhile, showed prices spiking by 1.6%, on the year, and 0.6% on the month, amid a jump in goods prices.
U.S. stocks held earlier gains following the data release, with futures tied to the S&P 500 indicating an opening bell gain of 10 points, while the Dow was called 140 points higher. The Nasdaq, meanwhile, is looking at a more modest 40 point gain.
Benchmark 10-year Treasury note yields edged 3 basis points lower to 4.213% while two-year notes were little-changed at 4.626%.
The #PPI troughed 8 months ago, yet the economic consensus and even the #Fed believes #inflation has been conquered. Forget the forecasts for multiple rate cuts. pic.twitter.com/ZNIiKLWdFA
— Richard Bernstein Advisors (@RBAdvisors) March 14, 2024
Stock Market Today
Stocks finished lower last night, with the S&P 500 ending modestly in the red and the Nasdaq falling around 0.5%. The declines came amid an uptick in Treasury yields tied to concern that inflation pressures have failed to ease over the opening months of the year.
A better-than-expected auction of $22 billion in 30-year bonds, drawing the strongest overall demand since last June, steadied the overall market, but stocks still slipped into the close with an eye towards today's dataset.
The Commerce Department will publish its February reading of factory-gate inflation at 8:30 am Eastern Time. Analysts are expecting a slowdown in the key core reading, which feeds into the Fed's favored PCE price index.
Retail sales figures for the month are also set for an 8:30 am release as investors search for clues on consumer strength, tied to a resilient job market. Those factors could give the Fed more justification to wait until the summer months to begin the first of its three projected rate cuts.
"The case for a gradual but sustained slowdown in growth in consumers’ spending from 2023’s robust pace is persuasive," said Ian Shepherdson of Pantheon Macroeconomics.
"Most households have run down the excess savings accumulated during the pandemic, while the cost of credit has jumped and last year’s plunge in home sales has depressed demand housing-related retail items like furniture and appliances," he added.
Benchmark 10-year Treasury yields are holding steady at 4.196% heading into the start of the New York trading session, while 2-year notes were pegged at 4.628%.
With Fed officials in a quiet period, requiring no public comments ahead of next week's meeting in Washington, the U.S. dollar index is trading in a narrow range against its global peers and was last marked 0.06% higher at 102.852.
On Wall Street, futures tied to the S&P 500 are indicating an opening bell gain of around 19 points, with the Dow Jones Industrial Average indicating a 140-point advance.
The tech-focused Nasdaq, which is up 7.77% for the year, is priced for a gain of around 95 points, with Tesla (TSLA) once again sliding into the red after ending the Wednesday session at a 10-month low.
In Europe, the regionwide Stoxx 600 was marked 0.35% higher in early Frankfurt trading, while Britain's FTSE 100 slipped 0.09% in London.
Overnight in Asia, the Nikkei 225 gained 0.29% as investors looked to a key series of wage negotiation figures from key unions that are likely to see the biggest year-on-year pay increases in three decades.
The broader MSCI ex-Japan benchmark, meanwhile, rose 0.18% into the close of trading.
Related: Veteran fund manager picks favorite stocks for 2024
