Stock Market News Today: Markets make small moves a day ahead of CPI (SP500)

U.S. stocks on Tuesday seesawed near the flatline, after market participants received mixed data and commentary on inflation.

Federal Reserve chair Jerome Powell, speaking at an event in Amsterdam, noted a lack of progress on bringing down inflation in the first quarter, but reiterated that interest rate hikes were unlikely.

Powell also called the latest producer price index (PPI) report for April mixed instead of hot, despite a bigger-than-anticipated rise in both the headline and core figures. March numbers were revised lower, while the details of the report showed muted growth in key metrics that constitute the Fed’s favorite inflation gauge.

The tech-heavy Nasdaq Composite (COMP:IND) gained 0.35% to 16,444.95 points in morning trade. The benchmark S&P 500 (SP500) added 0.09% to 5,226.21 points, while the blue-chip Dow (DJI) climbed 0.01% to 39,436.23 points.

Of the 11 S&P sectors, six were in the green.

Before the opening bell, the U.S. Bureau of Labor Statistics said headline PPI for April came in at +0.5% M/M, above the estimated figure of +0.3%. Core PPI, which excludes food and energy, also rose 0.5% versus a consensus of +0.2%. While the April readings came in hot, headline and core PPI for March were revised to -0.1% from +0.2% earlier. Moreover, a breakdown of the report shows that April’s jump was largely due to a rise in the index for portfolio management.

“A primary reason for the beat in April PPI was a sharp increase in portfolio management and investment advice, up roughly 4%. This will add 0.06ppts to core PCE inflation in April. Of course, stocks eased a bit last month and that should flow in later this quarter,” Renaissance Macro Research said on X (formerly Twitter).

The attention now turns to Wednesday’s highly-anticipated consumer price index (CPI) report, which will play a larger part in determining the Fed’s future monetary policy actions.

“The more important CPI inflation data release is tomorrow. It will be watched closely for the impact on households, companies’ price-setting behavior, the interaction between goods inflation and services/housing and, with all that, the policy implications for the U.S. and beyond,” Mohamed El-Erian, chief economic advisor at Allianz, said on X.

Fed chief Powell, appearing at an event held by the Foreign Bankers’ Association in Amsterdam, said that he anticipates inflation moving back down “on a monthly basis to levels that were more like the lower readings we were having last year.” He added that it was more likely the Fed holds monetary policy rates steady rather than hiking.

U.S. Treasury yields were lower after the PPI report and Powell’s remarks. The longer-end 30-year yield (US30Y) was down 1 basis point to 4.63%, while the 10-year yield (US10Y) was down nearly 1 basis point to 4.48%. The shorter-end more rate-sensitive 2-year yield (US2Y) was down 3 basis points to 4.85%.

See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.

Also grabbing a chunk of the spotlight on Tuesday were so-called meme stocks i.e. companies that made headlines back in 2021 after a flood of retail trading drove their shares to massive highs, thus squeezing short sellers who had bet against them.

A tweet by Roaring Kitty – the online handle for Keith Gill, a retail investor who sparked the original meme stock rally – on Sunday lit the fuse for the latest action, sending GameStop (GME) and other firms such as AMC (AMC), Beyond Meat (BYND), and Virgin Galactic (SPCE) higher on Monday. Those gains have extended today, with GME and AMC seeing multiple volatility trading halts.

In earnings-related news, Dow 30 component Home Depot (HD) was marginally lower. A delayed start to the critical spring season hit the home improvement retailer’s quarterly comparable sales.