Major Averages Turning In Mixed Performance Following Key Inflation Data

After ending the previous session on opposite sides of the unchanged line, the major U.S. stock indexes are turning in another mixed performance during trading on Wednesday.

While the tech-heavy Nasdaq is giving back ground after yesterday’s jump, the Dow and the S&P 500 have moved to the upside on the day.

The Nasdaq is currently down 45.00 points or 0.4 percent at 11,692.67 after hitting its lowest intraday level since November 2020.

Meanwhile, the Dow is up 234.98 points or 0.7 percent at 32,395.72, bouncing off its lowest closing level in over a year, and the S&P 500 is up 20.29 points or 0.5 percent at 4,021.34.

The mixed performance on Wall Street comes as traders digest a highly anticipated Labor Department report showing the annual rate of consumer price growth slowed by less than expected.

While the report showed the annual rate of consumer price growth slowed to 8.3 percent in April from a 40-year high of 8.5 percent in March, economists had expected the pace of growth to slow to 8.1 percent.

The annual rate of growth in core consumer prices also slowed to 6.2 percent in April from 6.5 percent in March, although the rate was expected to decelerate to 6.0 percent.

On a monthly basis, the Labor Department said its consumer price index rose by 0.3 percent in April after surging by 1.2 percent in March. Economists had expected prices to edge up by 0.2 percent.

Core consumer prices, which exclude food and energy prices, climbed by 0.6 percent in April after rising by 0.3 percent in March. Core prices were expected to increase by 0.4 percent.

“Overall, the April data will probably strengthen the Fed’s resolve to continue hiking rates by 50bp at the next couple of meetings – and could lead to renewed speculation about a 75bp hike or an inter-meeting move,” Andrew Hunter, Senior U.S. Economist at Capital Economics.

He added, “But with goods shortages tentatively easing and signs that wage growth is set to cool, we still think a more pronounced drop back in inflation will allow officials to slow the pace of tightening in the second half of the year.”

Energy stocks are seeing substantial strength on the day, benefiting from a sharp increase by the price of crude oil. Crude for June delivery is spiking $5.46 to $105.22 a barrel despite the release of a report showing an unexpected weekly jump in U.S. crude oil inventories.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index is up by 4 percent, while the NYSE Arca Oil Index and the NYSE Arca Natural Gas Index are both up by 3.3 percent.

Tobacco stocks are also turning in a strong performance after moving sharply lower in recent session, with the NYSE Arca Tobacco Index jumping 3.7 percent after ending the previous session at its lowest closing level in well over a year.

Steel, chemical and gold stocks are also seeing considerable strength on the day, while some weakness is visible among computer hardware and housing stocks.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan’s Nikkei 225 Index edged up by 0.2 percent, while China’s Shanghai Composite Index advanced by 0.8 percent.

The major European markets have also moved to the upside on the day. While the French CAC 40 Index has surged by 2.1 percent, the German DAX Index is up by 1.8 percent and the U.K.’s FTSE 100 Index is up by 1.3 percent.

In the bond market, treasuries have shown a lack of direction over the course of the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 2.991 percent.