Wall Street Today | CPI Freezes S&P 500 Record Run
RECAP
All S&P sectors closed down Tuesday after CPI data came in higher than expected, at 3.1% core inflation year over year for January.
The $S&P 500 Index(.SPX.US$ fell 1.37% to just below the 5,000 mark. The $Dow Jones Industrial Average(.DJI.US$ fell 1.35%, and the $Nasdaq Composite Index(.IXIC.US$ fell 1.80%.
Markets are pricing in a 78% probability that the Fed will deliver at least a quarter-point rate cut in June, according to the CME FedWatch Tool. They also see an 87.2% chance of at least three rate cuts by December. Meanwhile, March's once "priced-in" rate cut fell to just an 8.5% probability.
"The 'January effect,' where companies tend to raise prices at the turn of the year, was likely one driver of the stronger print, with companies continuing to push prices after another year of strong inflation," Josh Jamner, investment strategy analyst at ClearBridge Investments told MarketWatch. "Companies that expected prices to rise at a more muted pace in 2023 may have needed to 'catch up' and were able to do so given the continued strong pricing environment."
MACRO
Treasury Yields Rise to Highest Levels of Year After Hotter-than-expected CPI Inflation
Data released on Tuesday showed that inflation, as measured by the U.S. consumer-price index, came in hotter than expected for January. Treasury yields soared to levels not seen in at least two months on Tuesday after January's U.S. consumer price report showed inflation speeding up.
Consumer prices rose 0.3% last month, and the annual headline inflation rate failed to drop below the 3% threshold as investors were hoping for. Even the core rate that strips out volatile items like food and energy rose by a stronger-than-expected 0.4% last month, while the annual rate of core inflation was unchanged at 3.9%.
The yield on the $U.S. 2-Year Treasury Notes Yield(US2Y.BD$ soared 12.3 basis points to 4.59% from 4.467% on Monday. Yields move in the opposite direction to prices. The yield on the $U.S. 10-Year Treasury Notes Yield(US10Y.BD$ jumped 9 basis points to 4.26% from 4.170% on Monday after touching an intraday high of 4.3%.The yield on the $U.S. 30-Year Treasury Bonds Yield(US30Y.BD$ rose 6.7 basis points to 4.437%,
SECTORS
OPEC Sticks to Oil-Demand Growth View, Lifts Economic Forecast
The Organization of the Petroleum Exporting Countries left its expectations for global oil-demand growth unchanged but raised its economic forecast amid easing inflation and anticipated interest-rate cuts.
The Vienna-based cartel said in its monthly report that it expects oil demand to grow by 2.2 million barrels a day this year, in line with its previous estimates. It also held its forecast for 2025 steady at 1.8 million barrels a day.
The group raised its global economic growth forecast to 2.7% this year and 2.9% the next, supported by interest-rate cuts from the second half of 2024 and growth momentum in the U.S. Economic growth was previously forecast at 2.6% in 2024 and 2.8% in 2025.
It lifted U.S. economic growth estimates to 1.6% this year and to 1.7% in 2025, while it left the eurozone growth forecast unchanged at 0.5% this year and 1.2% the next.
COMPANIES
Upstart Reports Quarterly Loss
$Upstart(UPST.US$reported quarterly losses of $(0.11) per share Tuesday, which beat the analyst consensus estimate of $(0.14) by 21.43 percent. This is a 56 percent increase over losses of $(0.25) per share from the same period last year.
Shopify Logs Earnings Beat, But Its Stock Retreats
$Shopify(SHOP.US$ beat profit expectations for the latest quarter and projected margin improvement for the current one, but its shares were pulling back in Tuesday's premarket action.
JetBlue Airways Shares Soar 12% After Carl Icahn Reports 9.91% Stake
$JetBlue Airways(JBLU.US$ shares soared 21% Tuesday after a regulatory filing late Monday by activist investor Carl Icahn revealed he has acquired a 9.91% stake in the airline.
SSR Mining -50%, With Suspension of Turkey Mining Operation
$SSR Mining(SSRM.US$ shares fell sharply Tuesday after the mining company suspended all operations at its Copler mine Turkey, following a landslide.
Tesla Leads 11% Annual Drop in EV Prices as Demand Slowdown Continues
$Tesla(TSLA.US$slashed Model Y prices by 20% from January 2023 while overall U.S. car prices fell 3.5%, Kelley Blue Book says. The average U.S. price of a new EV in January was $55,353, down 10.8% from January 2023, Kelley Blue Book said Tuesday.
Source: Bloomberg, Dow Jones, CNBC, Reuters
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