S&P 500, Nasdaq end sharply higher on soft inflation data, eyes on
earnings
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[April 12, 2024] By
Stephen Culp
NEW YORK (Reuters) - U.S. stocks closed higher on Thursday, with
tech-related momentum stocks leading the charge, as fresh economic data
rekindled hopes that inflation remains in a cooling trend.
Interest rate-sensitive megacaps gave the tech-heavy Nasdaq a decisive
edge. The S&P 500 also closed in positive territory, while the Dow ended
essentially unchanged.
The Producer Prices index (PPI) came in softer than expected, supporting
the narrative that price growth is still cooling.
"The data this morning was mildly more supportive of sort of a benign
'soft landing' outcome than the data yesterday," said Brian Nick, senior
investment strategist at Macro Institute. "I guess it feels like a
natural kind of snapback from, what was potentially an overreaction
yesterday."
On Wednesday, hotter-than-expected CPI data sent stocks sharply lower
and benchmark Treasury yields to their highest level since November. The
report doused hopes that the central bank could implement as many as
three rate cuts before year-end, possibly starting as soon as its June
policy meeting.
"There’s a suggestion that the inflation numbers the Fed really cares
about - the PCE numbers - aren't going to be quite as dire as CPI," Nick
added. "And the parts of the market that were most punished yesterday
are having a bit of a comeback today."
While the PPI data was more encouraging, the data did indicate that
inflation's journey down toward the central bank's annual 2% target
might be too meandering for the Fed.
New York Fed President John Williams said "there's no clear need to
adjust monetary policy in the very near term."
Richmond Fed President Thomas Barkin said the central bank is not yet
confident pricing pressures will continue to ease.
"Investors are starting to absorb the possibility that maybe inflation
could linger just a little bit longer and the Fed's going to continue to
remain patient, which is their big word right now," said Joseph Sroka,
chief investment officer at NovaPoint in Atlanta.
Investors now switch their focus to first-quarter earnings season, with
results from three major U.S. banks - JPMorgan Chase & Co, Citigroup
Inc, and Wells Fargo & Co - due Friday morning.
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The Nasdaq Market site is seen on the day that shares of Truth
Social and Trump Media & Technology Group start trading under the
ticker "DJT", outside the Nasdaq Market site in New York City, U.S.,
March 26, 2024. REUTERS/Brendan McDermid
The Dow Jones Industrial Average fell 2.43 points, or 0.01%, to
38,459.08, the S&P 500 gained 38.42 points, or 0.74%, to 5,199.06
and the Nasdaq Composite added 271.84 points, or 1.68%, to
16,442.20.
Of the 11 major sectors in the S&P 500, tech was out front, while
financial shares were the laggards.
The FANG+ index of megacap momentum stocks was a clear outperformer,
gaining 2.6%.
CarMax slid 9.2% after the pre-owned vehicles retailer missed
analysts' estimates for fourth-quarter results and said it might not
meet its long-term vehicle sales target.
Globe Life tumbled 53.1% after Fuzzy Panda Research disclosed a
short position in the company, alleging multiple instances of
insurance fraud.
Rent the Runway skyrocketed by 161.9% after the apparel rental
company said it was betting on artificial intelligence to power its
current year growth.
Biotech firm Alpine Immune Sciences is to be acquired by Vertex
Pharmaceuticals for about $4.9 billion in cash, both companies said.
Alpine surged 36.9%.
Advancing issues outnumbered declining ones on the NYSE by a
1.12-to-1 ratio; on Nasdaq, a 1.23-to-1 ratio favored advancers.
The S&P 500 posted 11 new 52-week highs and 6 new lows; the Nasdaq
Composite recorded 51 new highs and 135 new lows.
Volume on U.S. exchanges was 10.39 billion shares, compared with the
11.48 billion average for the full session over the last 20 trading
days.
(Reporting by Stephen Culp; Additional reporting by Shashwat Chauhan
and Shristi Achar A in Bengaluru; Editing by David Gregorio)
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