Stocks finished higher Tuesday, with the S&P 500 hitting a fresh record high close, as investors responded to key February data that could cement market bets on a June rate cut from the Federal Reserve.
The S&P 500 gained 1.12% to end at 5,175.27, beating the previous record high close from March 7. The Dow Jones Industrial Average finished up 0.61% to 39,005.49, while the tech-heavy Nasdaq advanced to 16,265.64.
Tech stocks such as Nvidia and Oracle posted big gains.
Larry Tentarelli, chief technical strategist with the Blue Chip Daily Trend Report, said he viewed Tuesday’s CPI report "as slightly more cautionary, as core CPI was reported slightly above forecast for the month-over-month and 12-month periods."
"In our view, unless inflation starts to drop and come in below forecast, most notably CPI and Core PCE, then we expect the Fed to take a patient and measured approach to any potential rate cuts," he said. "If there is any notable weakness in the jobs market, that would increase the chance of a Fed rate cut by June."
Updated at 1:30 PM EDT
Soft Auction
Treasury yields extended their moves higher Tuesday after an auction of $39 billion in new 10-year notes drew mixed demand following a hotter-than-expected February inflation report.
Investors placed bids worth around $97.9 billion for the re-opened bonds, generating a bid-to-cover ratio of 2.51, down from the 2.56 level recorded at last month's sale. Foreign bidders snapped-up around 64.3% of the sale, Treasury data indicated, down sharply from last month's 71% tally.
Benchmark 10-year notes were last marked at 4.166% following the sale, while 2-year notes were pegged at 4.561%.
10 year auction:
— 🤠Weimar Silver Baron🤠 (@BankerWeimar) March 12, 2024
Bid to cover 2.51
Dealers left holding 17%
64% indirect bidder.
Not great pic.twitter.com/WLummqCvIR
Updated at 10:41 AM EDT
Back in black
Nvidia (NVDA) shares were back on the move Tuesday, rising 5.8% by midday to change hands at $908 each following better-than-expected third quarter earnings from Oracle and the teasing of a new partnership between the AI chipmaker and the cloud computing service provider.
Related: Analysts revise Oracle price targets after Q3 earnings and Nvidia deal tease
Updated at 10:41 AM EDT
Ploughing through
Treasury yields are trading firmly higher in the wake of the February inflation report, and perhaps positioning for today's $39 billion 10-year auction, but the move isn't holding back broader stock gains.
Benchmark 10-year note yields were last seen 4 basis points higher on the session at 4.139% while 2-year notes jumped 5 basis points to 4.581%.
The S&P 500, meanwhile, was holding on to a 45 point, or 0.89% gain, while the Nasdaq was 172 points, or 1.09%.
S&P 500 Opening Bell Heatmap (Mar. 12, 2024)$SPY +0.48% 🟩$QQQ +0.51% 🟩$DJI +0.21% 🟩$IWM -0.47% 🟥
— Wall St Engine (@wallstengine) March 12, 2024
Stocks on move: $MSTR +2.5%, $ORCL +10.7%, $PDD +3.6%, $NVDA +2.3%, $MMM +4.4%, $COST +2.5% (🟢) || $ONON -15.2%, $ASAN -8.9%, $BA -4.3%, $TSLA -1.7%, $LUV -13.4%, $COIN… pic.twitter.com/UJ4BgWkLLL
Updated at 10:01 AM EDT
Holding Gains
Stocks turned back into the green, following an earlier slip, heading into the opening half hour of trading as investors parse the mixed bag of data stuffed into a perplexing February inflation report.
The S&P 500 was last marked 17 points higher, or 0.35%, with gains of around 63 points for the Nasdaq and 58 points for the Dow Jones Industrial Average.
"Today's report suggests that while the last mile towards 2% has become a bit longer, the underlying report offers a modicum of hope that by June or certainly July the Fed should feel more comfortable that they're increasingly closer to their destination," said Quincy Krosby, chief global strategist for LPL Financial in Charlotte.
Increases over last 3 years...
— Charlie Bilello (@charliebilello) March 12, 2024
CPI Medical Care: +5.8%
CPI Apparel: +9.8%
US Wages: +15.0%
CPI New Cars: +19.4%
Actual Asking Rents: +19.5%
CPI Shelter: +19.7%
CPI Food at home: +20.8%
CPI Food away from home: +21.0%
CPI Used Cars: +22.3%
CPI Electricity: +26.8%
CPI Gas…
Updated at 9:41 AM EDT
New 3M Boss
3M MMM shares moved firmly higher in early Tuesday trading after the industrial group, which has lost more than $100 billion in value since 2018, named a new CEO to replace the outgoing Mike Roman.
William Brown, 61, the former CEO of L3Harris Technologies, will assume Roman's role on May 1. Roman, 51, will remain as 3M's executive chairman.
3M share were marked 5.8% higher in early trading and changing hands at $99.42 each.
Updated at 9:04 AM EDT
Maybe not May, but ...
Traders have accelerated bets on a June rate cut, according to the CME Group's FedWatch, which indicated a 62.6% chance the Fed will begin the first of its three projected reductions at the start of the summer.
However, Lindsay James, investment strategist at Quilter Investors, is taking a more cautious approach given the strength of the broader economy, still-solid corporate earnings and a resilient job market ahead of next week's policy meeting in Washington.
“The Fed’s data-dependent approach is expected to continue, but we could start to see a clearer path ahead being mapped out - though we are unlikely to see the start of any cuts until at least the summer months,” James said.
Related: February inflation surprises with modest uptick, but core pressures ease
Updated at 8:44 AM EDT
Inflation uptick
A mixed bag of February inflation data hasn't had a downward impact on futures as yet, with headline CPI quickening to 3.2% and the core reading easing to 3.8%.
Monthly readings nudged higher on a headline basis, but held steady at the core, suggesting Fed Chair Jerome Powell's assessment that more data is needed to confirm the start of rate cuts, but added that "we're not far" from reaching that point.
Stocks are adding modestly to gains, with the S&P 500 expecting a 30 point opening bell gain and the Dow called 130 points higher.
CPI for all items rose 0.4% in February; gasoline and shelter up https://t.co/dJyJeKlXDJ #CPI #BLSdata
— BLS-Labor Statistics (@BLS_gov) March 12, 2024
Check back for updates throughout the trading day
Stocks finished modestly lower on Monday, led to the downside once again by the tech-focused Nasdaq, thanks in part to a slight move higher in Treasury yields tied to concern that last week's better-than-expected jobs report could suggest inflation pressures remain deeply embedded in the world's biggest economy.
Economists, however, expect the February CPI report, due at 8:30 am Eastern Time, to provide a mixed picture of price pressures, with the headline reading rising to 0.4% on the month but holding at 3.1% on an annual basis.
The closely tracked core reading, meanwhile, is likely to slow modestly on both a monthly and annual basis, readings that are likely to confirm market bets that the Federal Reserve will begin the first of its three forecast rate cuts at its June policy meeting.
"The CPI report today won’t alone determine whether the Fed eases in May; a great deal more data will be released before the FOMC meeting (but) markets will be unhappy at an overshoot," said Ian Shepherdson of Pantheon Macroeconomics.
Benchmark 10-year note yields were holding at 4.092% ahead of today's inflation report and a $39 billion auction of new paper later in the session. Two-year notes were marked at 4.539%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.01% higher at $102.872.
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On Wall Street, Oracle (ORCL) shares were a notable early mover, rising more than 13% in premarket trading. The cloud-focused database-management group posted better-than-expected fiscal-third-quarter earnings and said demand for its Gen2 AI infrastructure "substantially exceeds supply."
Boeing (BA) shares, meanwhile, extended declines in the premarket, falling to a fresh four-month low. The drop followed a New York Times report that the planemaker failed 33 of 89 audit tests conducted by the Federal Aviation Administration on 737 Max processes after the Alaska Airlines door-panel incident in January.
In broader markets, futures contracts tied to the S&P 500 are indicating an opening-bell gain of around 15 points, with the Nasdaq called 92 points higher. Futures tied to the Dow suggest a 4 point dip.
In overseas markets, Europe's Stoxx 600 was marked 0.3% higher in early Frankfurt trading. Softer-than-expected wage data in Britain added to hopes of a Bank of England rate cut, sending the FTSE 100 1.01% higher in London.
Overnight in Asia, a muted economic outlook from Bank of Japan Gov. Kazuo Ueda snuffed out bets on an early end to negative rate policies. That clipped gains for the Nikkei 225, which ended 0.06% lower on the session.
Solid gains for stocks in China, meanwhile, helped the regionwide MSCI ex-Japan index rise 0.9% into the close of trading.
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