Traders work on the floor during morning trading at the New York Stock Exchange (NYSE) on March 06, 2024 in New York City.
Stocks jumped Tuesday after fresh U.S. inflation data was about in line with expectations, clearing the way for investors to resume buying high-flying tech names such as Nvidia and Meta Platforms.
The Dow Jones Industrial Average gained 235.83 points, or 0.61%, to close at 39,005.49. The S&P 500 ticked up 1.12% to finish the session at 5,175.27, surpassing the previous record high close from March 7. The Nasdaq Composite advanced 1.54% to 16,265.64.
Shares of chipmaker Nvidia climbed more than 7%. Microsoft gained 2.6%, and Meta popped 3.3%. Oracle surged more than 11% after beating Wall Street earnings estimates.
"[I]t's proving difficult to see what may stop the market's momentum, as earnings, inflation, and interest rates are moving in the right direction," said Skyler Weinand, chief investment officer at Regan Capital.
The consumer price index climbed 0.4% in February and 3.2% year over year, the Bureau of Labor Statistics said on Tuesday. Economists polled by Dow Jones expected a 0.4% increase last month and 3.1% year over year. Core inflation, which strips out food and energy from the headline reading, climbed 0.4% in February, compared to a forecast gain of 0.3%.
Investors weren't overly concerned the report would change expectations of the Federal Reserve cutting rates in June. That said, central bank's path to a 2% target could remain "choppy," according to LPL Financial chief economist Jeffrey Roach.
"The inflation experience is a bit like the concentration in the equity markets right now," Roach said. "Outside of shelter and gas prices, inflation would be benign."
Money Report
Investors now turn their attention to the producer price index report due later this week and the Fed's next monetary policy meeting later this month.
Stocks close higher, S&P 500 notches fresh record
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Stocks closed higher on Tuesday, with the benchmark S&P 500 reaching a fresh record high.
The broad market index climbed 1.1% to close at 5,175.27. The Dow Jones Industrial Average gained about 235 points, or 0.6%, to finish the session at 39,005.49, while the Nasdaq Composite added 1.5% to 16,265.54.
— Brian Evans
Investor sentiment skews net bullish but momentum is fading, Citi says
The current bull market rally has more or less been ongoing since late October. But despite sentiment skewing net bullish, momentum seems to have faded in major markets, Citi said.
"Investor sentiment on U.S. equities appears less bullish, but there's no turn to any bearishness. There remains only a few shorts on S&P and none at all on Nasdaq positioning, but the rate of new longs and ETF inflows have slowed since the end of last year," wrote the bank's Chris Montagu.
Overseas, positioning has been moderating from extended bullish levels in Europe. Momentum has also faded in the Chinese equities market, leaving sentiment less bearish but not necessarily bullish, Montagu added.
— Lisa Kailai Han
Small caps sit out of rally
Small-cap names bucked Tuesday's uptrend in the market.
The small cap-focused Russell 2000 slid 0.2% in Tuesday's session. Meanwhile, the benchmark S&P 500 has gained about 1%.
That aligns with the broader trend of underperformance among smaller stocks. The Russell 2000 is up less than 2% in 2024, while the S&P 500 has climbed more than 8%.
— Alex Harring
U.S. budget deficit surged in February, now past $800 billion
The federal government's sea of red ink swelled in February, boosting the budget deficit closer to $1 trillion through the first five months of the fiscal year.
With revenues declining and outlays growing, the shortfall on the month totaled $296 billion, pushing the total deficit to $828.1 billion, or 15% higher than the same point last year, the Treasury Department said Tuesday. The monthly shortfall topped February 2023's total of $262 billion.
At the same point in fiscal 2023, the deficit was $723 billion; the year ended at 1.7 trillion. Government borrowing costs have risen sharply over the past year as the Federal Reserve has kept rates elevated.
—Jeff Cox
NYCB plans reverse stock split to boost share price
New York Community Bancorp plans to perform a reverse stock split as the company looks to stabilize itself after a steep drop in value this year.
The regional lender said in a press release late Monday that it will submit a shareholder proposal to do "at least" a one-for-three reverse stock split.
This move would mean that an investor holding three shares valued at $3 would instead have one share valued at $9.
Shares of NYCB were trading at about $3.37 per share on Tuesday afternoon. Some institutional investors are reluctant to hold stocks that are below $5 per share.
The reverse stock split plan comes in conjunction with the $1 billion equity raise announced last week.
— Jesse Pound
Information technology, consumer discretionary stocks among best performers in S&P 500
Consumer discretionary and information technology stocks outperformed on Tuesday, contributing to the S&P 500's 0.6% gain in afternoon trading.
Information technology was the best-performing sector in the broad-based index, rallying 1.5%. Oracle was the best performer, popping more than 12% for its best day since December 2021. Nvidia rose more than 5%, while Hewlett Packard Enterprise, ServiceNow, and IBM rose more than 3% each.
Consumer discretionary stocks also rose across the board, lifting the S&P sector 0.9%. Amazon and Best Buy were the best-performing stocks, adding more than 2% each. Lululemon Athletica and Chipotle Mexican Grill each rose 1.6%. Airbnb, Bath & Body Works and Marriott International inched up more than 1%.
— Samantha Subin
Stocks making midday moves
Here are some of the names making moves in midday trading:
- Southwest Airlines — Shares plunged more than 14% after the airline said it was reevaluating all prior full year 2024 guidance, citing delivery delays from Boeing. Southwest also said that its first-quarter leisure bookings were weaker than expected.
- 3M — The stock gained 4% following the company's announcement that the former CEO of L3Harris Technologies, William Brown, will become the 3M's new CEO effective May 1.
- Boeing — Shares fell more than 4% after the New York Times reported that said the jet plane maker failed 33 of 89 audits on its 737 Max jet, with 97 cases of alleged noncompliance.
To see more companies moving in midday trading, read the full story here.
— Michelle Fox
Southwest shares poised for worst day since 2020
Southwest headed for its worst day in about four years after the airline said its previously shared full-year financial outlook was questionable.
The Dallas-based airline said it was re-examining all prior full-year guidance for 2024 because of delays from Boeing, its only supplier of planes. Elsewhere, Southwest said leisure bookings in the first quarter were weaker than anticipated.
Shares of the airline tumbled more than 14% in Tuesday's session. If that holds through market close, it would mark the stock's biggest loss in a session since March 12, 2020, when shares slid 15.1%.
With Tuesday's sell off, the stock is now just slightly above flat on the year.
Boeing shares dropped more than 3% in Tuesday's session.
— Alex Harring
Oracle pops 10%, heads for best day since December 2021
Oracle shares surged more than 10% on Tuesday and headed for their best day since Dec. 10. 2021 after the database software company posted stronger-than-expected earnings fiscal third-quarter results after the bell Monday.
The company topped earnings expectations by 3 cents a share, while revenues came in at $13.28 billion, falling slightly short of the $13.30 billion expected by analysts polled by LSEG.
Oracle said that its cloud services and license support segment saw a 12% rise in sales during the period, due in part to a spike in demand for artificial intelligence servers. The company also said that large new cloud infrastructure contracts signed during the period pushed up total remining performance obligations 29%.
The stock was also the best performer in the S&P 500's information technology sector.
— Samantha Subin
Grayscale seeks to launch lower-fee bitcoin ETF spun off from GBTC
Grayscale on Tuesday filed to launch a lower-fee bitcoin exchange-traded fund under the ticket BTC through a spin-off of its flagship Grayscale Bitcoin Trust (GBTC) ETF. It did not disclose what the potential fees would be.
The company is seeking to create the new ETF through the mechanics of a corporate spin-off. As such, a designated percentage of GBTC shares would be used, upon regulatory approval, to seed the new bitcoin mini ETF. That also means existing investors of Grayscale's flagship fund would able to access the mini product without having to sell their GBTC shares to transfer into the mini and pay a capital gains tax.
Grayscale's successful campaign to convert its legacy closed-end bitcoin fund into an ETF helped force the SEC approval of the nine newborn spot bitcoin ETFs in the U.S. this January. GBTC's high fee of 1.5% stands out against the others, many of which are between 0% and 0.5%. Since the newly launched spot bitcoin ETFs began trading, GBTC has seen outflows of more than $10 billion.
The move also comes amid a rally in bitcoin. The cryptocurrency has been hitting new all-time highs for the past week and investors are optimistic about its strong setup for the remainder of the year, between growing demand through ETFs and the expected supply shock after the upcoming Bitcoin halving.
— Tanaya Macheel
Bank of America raises S&P earnings outlook
Bank of America raised its 2024 earnings-per-share estimate for the S&P 500 to $250 from $235 Tuesday, suggesting a 12% growth year over year.
The move comes after companies delivered a strong beat for the fourth quarter and the bank's economists raised their 2024 GDP forecast to 2.7% year over year from 1.4%. The GDP increase translates to 5 percentage points in additional EPS growth, strategist Ohsung Kwon said.
"2023 was a transition year for Corporate America, and companies have now adjusted to the new higher rate and tepid demand environment," he wrote in a note to clients.
This year Microsoft, Amazon and Alphabet are entering a reinvestment cycle, expected to spend $180 billion in capital expenditures, he pointed out.
"History suggests companies in reinvestment cycles underperform (Exhibit 20), but we see a potential virtuous cycle forming from AI (artificial intelligence) investments," Kwon said.
He also sees signs that the manufacturing downturn is coming to an end.
For 2025, Bank of America is forecasting EPS at $275, growing 10% year over year.
— Michelle Fox
Stocks open higher
Stocks were higher on Tuesday after February's consumer price index report largely met consensus estimates.
The S&P 500 climbed 0.4%, while the Nasdaq Composite gained 0.7%. The Dow Jones Industrial Average added 124 points, or 0.3%.
— Brian Evans
Oil prices edge lower as traders evaluate latest U.S. inflation data
Crude oil futures edged lower Tuesday as traders assessed the latest U.S. inflation data and what it may mean for the Federal Reserve's decision making on interest rates this year.
The West Texas Intermediate contract for April shed 38 cents, or 0.49%, $77.55 a barrel. The Brent contract for May lost 36 cents, or 0.39%, to $81.89 a barrel.
Federal Reserve Chairman Jerome Powell told Congress last week that the central bank is waiting for more data to indicate that inflation is moving sustainably at 2% before cutting interest rates.
Lower rates typically stimulate economic growth, which fuels crude demand.
— Spencer Kimball
February CPI rises 0.4% month over month, climbs 3.2% year over year
The consumer price index report for February was mixed, raising questions on when the Federal Reserve will start cutting rates.
CPI climbed 0.4% month over month and 3.2% on a year-over-year basis. Economists polled by Dow Jones expected a month-over-month increase of 0.4%. Year over year, they had forecast a gain of 3.1%.
Core CPI, which excludes food and energy prices, was also slightly hotter than expected year over year and month over month.
— Fred Imbert
Stocks making the biggest moves before the bell
Check out some of the companies making headlines in premarket trading.
- Oracle — The information technology stock climbed 13.3% on the back of strong per-share earnings. Oracle posted adjusted earnings per share of $1.41, topping the $1.38 consensus estimate of analysts polled by LSEG.
- On Holding — Shares plunged more than 14% after the shoemaker posted quarterly results that disappointed investors. In its fourth quarter, On Holding reported a loss of CHF0.05), below the expectation CHF0.10 earnings per share, according to the StreetAccount consensus estimate. Revenue of CHF447.1 million missed the CHF450.9 million consensus estimate.
- Kohl's — Shares added 2.2% after the retailer reporting an earnings and revenue beat for the fourth quarter. Earnings per share came in at $1.67, besting the $1.28 consensus estimate, per LSEG. Revenue was $5.71 billion, versus the $5.7 billion expected. The company also announced it would add Babies R Us to around 200 stores this fall.
Read the full list here.
— Brian Evans
Core retail sales likely declined in February, Bank of America says
Aditya Bhave, US economist at Bank of America, estimated in a note to clients Tuesday that retail sales ex-autos were down 0.1% in February, while core retail sales dipped 0.3%.
"If our forecast for February is correct, the three-month annualized growth rate would turn negative even in real terms," Bhave said.
Part of the issue for retail sales data is that services spending remains strong, and inflation is higher in that category.
"Although real retail spending has held up well so far due to deflation in goods categories ... the risk is that sticky services inflation will further shrink retail's wallet share, to the extent that real spending also slows down," Bhave said.
The Census Bureau's retail sales report for February is due out Thursday.
— Jesse Pound
How the market could react to CPI
Traders are eagerly awaiting the February consumer price index report due at 8:30 a.m. ET, and traders at JPMorgan think the stock market could see sharp moves on the back of the report. Here are two scenarios they see playing out:
- 37.5% chance — The CPI rises 0.2%-0.3%: A print like this would give the S&P 500 a boost of 0.25% to 0.75%, according to JPMorgan. "A print at the lower end of the range, would build comfort in the disinflationary trend and while not enough to reprice Fed expectations, Equities may take this as a signal for further rotation into more Cyclical/Value sectors," JPMorgan said.
- 30% chance — The CPI rises 0.3%-0.4%: Such a gain would raise concern that inflation may be reaccelerating. JPMorgan sees the S&P 500 falling 0.5%-1% under this outcome.
— Fred Imbert
Xiaomi shares surge after it announces first EV delivery on March 28
Shares of Chinese consumer electronics company Xiaomi surged over 8% after the company announced that it will start deliveries of its first electric vehicle on March 28.
The stock outperformed the wider Hang Seng index, which was up 1.25%.
In a Weibo post, the smartphone company announced that the orders for the SU7 model will be taken at 59 stores in 29 cities across China.
— Lim Hui Jie
Japan 2-year bonds hit 13-year high; 10-year yields also climb
Japan's 2-year government bond yields hit a 13-year high amid speculation that the Bank of Japan will soon tighten monetary policy.
The yield on the 2-year JGB rose to 0.2% on Tuesday, having last reached this level in January 2010.
The yield on the benchmark 10-year JGB also climbed to 0.778%, its highest level since November 2023.
— Lim Hui Jie
Japan's February corporate inflation rate comes in higher than expected
Japan's corporate goods price index rose 0.6% year-on-year in February beating the 0.5% expected by economists polled by Reuters and quicker than December's figure of 0.2%.
On a month-on-month basis, the CGPI climbed 0.2%, a faster pace than the 0.1% expected in the Reuters poll and also more than the 0% reading in December.
The CGPI measures the price changes of goods traded within the corporate sector.
A strong inflation reading could also clear the way for the Bank of Japan to raise rates sooner rather than later, which would weigh on Japan's equity markets.
— Lim Hui Jie
Jamie Dimon sees 'a little bit of a bubble'
JPMorgan CEO Jamie Dimon believes there's "a little bit of a bubble" forming in the stock market, according to Reuters. Dimon reportedly made the comments at the Australian Financial Review business summit.
He added that the Federal Reserve should wait past June before cutting interest rates.
"You can always cut it quickly and dramatically. Their credibility is a little bit at stake here. I would even wait past June and let it all sort it out," Dimon said.
— Yun Li
JPMorgan's Kolanovic says stay defensive
One of Wall Street's top stock strategists, Marko Kolanovic of JPMorgan, is advising clients to stay defensive in the stock market as the rally showed signs of stalling.
"Markets are priced for perfection as valuations are rich, and extreme crowding in momentum stocks risks a sharp correction in this factor," JPMorgan's chief global markets strategist in a note.
He also said the market is ignoring "substantial geopolitical and political risks." Meanwhile, he believes that inflation could surprise to the upside, which could keep the Fed's target rate higher for longer.
— Yun Li
Oracle shares surge after earnings
Oracle shares popped more than 12% in extended trading after fiscal fourth-quarter results topped analysts' earnings estimates. The firm's cloud services and license support segment, its largest business, saw a 12% increase in revenue. However, revenue came in a bit light of expectations.
— Yun Li
