In-Line Inflation Data May Generate Buying Interest On Wall Street

The major U.S. index futures are currently pointing to a higher open on Tuesday, with stocks likely to move to the upside following the mixed performance seen in the previous session.

Early buying interest may be generated in reaction to a Labor Department showing consumer prices in the U.S. increased in line with economist estimates in the month of February.

The Labor Department said its consumer price index rose by 0.4 percent in February after climbing by 0.5 percent in January. The advance by the index matched expectations.

Core consumer prices, which exclude food and energy prices, increased by 0.5 percent in February after rising by 0.4 percent in the previous month. Economists had expected core prices to rise by 0.4 percent.

The report also showed the annual rate of consumer price growth slowed to 6.0 percent in February from 6.4 percent in January.

The year-over-year growth, which was in line with economist estimates, marked the smallest 12-month increase since September 2021.

The annual rate of growth by core consumer prices edged down to 5.5 percent in February from 5.6 percent in January.

The slowdown in year-over-year price growth may help offset recent concerns about the outlook for interest rates ahead of next week’s Federal Reserve meeting.

Recent turmoil in the banking industry has also led to optimism the Fed may hold off another increase in interest rates.

U.S. stocks recovered after an early setback on Monday, but still ended on a mixed note, although shares from the technology space outperformed, spending much of the day’s session in positive territory.

Concerns over the fallout of the collapse of Silicon Valley Bank rendered the mood quite bearish at the start.

The assurance from the U.S. Treasury, Federal Reserve, and Federal Deposit Insurance Corporation that they would “fully protect” depositors, including those with assets above the federally guaranteed $250,000 limit, helped lift sentiment.

Hopes that the Fed will pause its tightening cycle due to the debacle in the banking sector contributed as well to the market’s recovery.

Among the major averages, the Dow, which plunged to 31,624.87 in early trading, ended with a loss of 90.50 points or 0.3 percent at 31,819.14. The S&P 500 ended 5.83 points or 0.2 percent lower at 3,855.76, recovering from 3,808.86.

The Nasdaq ended higher by 49.96 points or 0.5 percent at 11,188.84, more than 200 points off the day’s low of 10,982.80.

Several stocks from the banking sector posted big losses. First Republic Bank tanked more than 60 percent, while Keycorp, Zions Bancorporation and First Horizon National all shed more than 20 percent.

American Express ended nearly 5 percent down. Goldman Sachs closed lower by more than 3 percent, and JP Morgan Chase drifted down 1.7 percent.

Travelers Companies, Merck, Caterpillar, Walt Disney, Chevron, Visa and Intel also ended weak, albeit with less pronounced losses.

Amgen, Microsoft, Apple, Salesforce.com, Coca-Cola, Walgreens Boots Alliance, Johnson & Johnson and IBM ended with sharp to moderate gains.

Commodity, Currency Markets

Crude oil futures are slumping $1.26 to $73.54 a barrel after plunging $1.88 to $74.80 a barrel on Monday. Meanwhile, after soaring $49.30 to $1,916.50 an ounce in the previous session, gold futures are slipping $3.70 to $1,912.80 an ounce.

On the currency front, the U.S. dollar is trading at 134.23 yen compared to the 133.21 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0722 compared to yesterday’s $1.0731.

Asia

Asian stocks tumbled on Tuesday as worries persisted about the fallout from the Silicon Valley Bank (SVB) collapse and investors awaited key U.S. inflation data later in the day for clues on the path forward for U.S. monetary tightening.

The dollar index edged up slightly in Asian trade and gold traded flat around $1,900 per ounce, while oil extended recent declines as recession fears mounted.

Chinese and Hong Kong shares fell to their lowest in more than two months, with banks and tech stocks leading losses on SVB contagion fears.

Investors also grew more cautious after media reports suggested that Chinese President Xi Jinping is slated to visit Russia as soon as next week.

On Monday, the United States, Australia and the United Kingdom announced a nuclear-powered submarine deal as part of efforts to counter the Chinese aggressive behavior in the Indo-Pacific region.

China’s Shanghai Composite Index fell 0.7 percent to 3,245.31. Hong Kong’s Hang Seng Index slumped 2.3 percent to settle at 19,247.96 despite U.S. government efforts to shore up confidence.

Japanese shares ended sharply lower as flattening yield curves weighed on the banking sector.

First Bank of Toyama shares plummeted 11.7 percent, while Mizuho Financial, Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group lost 7-9 percent.

The Nikkei 225 Index plunged 2.2 percent to 27,222.04, marking its worst single-day loss in nearly four months. The broader Topix ended 2.7 percent lower at 1,947.54.

Seoul stocks plunged on concerns that the collapse of two U.S. banks may have a broader impact on the U.S. financial sector. The Kospi ended 2.6 percent lower at 2,348.97. Samsung Electronics, LG Chem, Hyundai Motor and SK Hynix lost 1-4 percent.

Australia markets closed lower, dragged down by mining, energy and financial stocks. Gold miners surged, with Northern Star and Newcrest rising 1-3 percent.

The benchmark S&P/ASX 200 Index fell 1.4 percent to 7,008.90, extending losses for a third straight session. The broader All Ordinaries index slipped 1.5 percent to close at 7,201.10.

Europe

European stocks have moved mostly higher on Tuesday after logging their steepest single day decline this year the previous day on fears of contagion from the collapse of U.S. lenders Silicon Valley Bank and Signature Bank.

While the U.K.’s FTSE 100 Index is nearly unchanged, the French CAC 40 Index is up by 0.7 percent and the German DAX Index is up by 0.9 percent.

Italy’s top insurer Generali has moved notably higher after reporting record operating profit in 2022.

Casino Guichard Perrachon SA has also moved to the upside in Paris. The mass-market retail group said that it is selling part of its stake in Assaí for 174 million shares to boost its deleveraging.

TeamViewer has also rallied. The remote access computer software provider said it expects double-digit percentage growth in revenue, stable margin and renewed share buyback in fiscal 2023.

Meanwhile, Swiss lender Credit Suisse has plunged after flagging “material weaknesses” in financial reporting.

Volkswagen shares have also tumbled. The German auto giant unveiled plans to invest 180 billion euros between 2023 – 2027 in its most attractive profit pools and regions.

Financial services business Close Brothers has also slumped after reporting a 90 percent decrease in adjusted operating profit to £12.6 million during the six months ending January 2023.

U.S. Economic Reports

Consumer prices in the U.S. increased in line with economist estimates in the month of February, according to a report released by the Labor Department on Tuesday.

The Labor Department said its consumer price index rose by 0.4 percent in February after climbing by 0.5 percent in January. The advance by the index matched expectations.

Core consumer prices, which exclude food and energy prices, increased by 0.5 percent in February after rising by 0.4 percent in the previous month. Economists had expected core prices to rise by 0.4 percent.

The report also showed the annual rate of consumer price growth slowed to 6.0 percent in February from 6.4 percent in January.

The year-over-year growth, which was in line with economist estimates, marked the smallest 12-month increase since September 2021.

The annual rate of growth by core consumer prices edged down to 5.5 percent in February from 5.6 percent in January.