Looming Inflation Data May Lead To Lackluster Performance On Wall Street

The major U.S. index futures are currently pointing to a roughly flat open on Tuesday, with stocks likely to show a lack of direction after ending the previous session little changed.

A lack of major U.S. economic data may keep some traders on the sidelines ahead of the release of several key reports in the coming days.

The Labor Department’s report on consumer price inflation in the month of March is due to be released tomorrow morning and could have a significant impact on the outlook for interest rates.

Economists currently expect consumer prices to rise by 0.3 percent in March, while the annual rate of growth is expected to slow to 5.2 percent from 6.0 percent.

Core consumer prices, which exclude food and energy prices, are expected to climb by 0.4 percent in March, although the year-over-year growth is expected to accelerate to 5.6 percent from 5.5 percent.

Reports on produce price inflation, retail sales and industrial production are also likely to attract attention in the coming days.

Earnings news may also drive trading later in the week, with financial giants Citigroup (C), JPMorgan Chase (JPM) and Wells Fargo (WFC) due to report their quarterly results on Friday.

Stocks came under pressure in early trading on Monday but staged a notable recovery over the course of the session. The major averages climbed well off their worst levels of the day, with the Dow and the S&P 500 reaching positive territory.

The major averages eventually finished the session mixed. While the Nasdaq edged down 3.60 points or less than a tenth of a percent to 12,084.36, the S&P 500 inched up 4.09 points or 0.1 percent to 4,109.11 and the Dow rose 101.23 points or 0.3 percent at 33,586.52.

The early weakness on Wall Street partly reflected ongoing concerns about the outlook for the economy and interest rates following last week’s monthly jobs report.

The Labor Department’s closely watched report, which was released while the markets were closed for Good Friday, showed employment in the U.S. increased roughly in line with economist estimates in the month of March.

The report said non-farm payroll employment climbed by 236,000 jobs in March after jumping by an upwardly revised 326,000 jobs in February.

Economists had expected employment to rise by about 240,000 jobs compared to the addition of 311,000 jobs originally reported for the previous month.

Meanwhile, the Labor Department said the unemployment rate edged down to 3.5 percent in March from 3.6 percent in February. The unemployment rate was expected to be unchanged.

On the heels of the report, CME Group’s FedWatch Tool is currently indicating a 71.7 percent chance the Federal Reserve will raise interest rates by a quarter point next month.

Selling pressure waned over the course of the session, however, as traders looked ahead to key inflation data later in the week along with reports on retail sales and industrial production as well as the minutes of the latest Federal Reserve meeting.

Steel stocks turned in some of the market’s best performances on the day, resulting in a 2.3 percent surge by the NYSE Arca Steel Index.

Significant strength also emerged among computer hardware stocks, as reflected by the 2.0 percent jump by the NYSE Arca Computer Hardware Index.

Semiconductor, transportation and natural gas stocks also saw notable strength, while weakness remained visible among gold and biotechnology stocks.

Commodity, Currency Markets

Crude oil futures are inching up $0.06 to $79.80 a barrel after tumbling $0.96 to $79.74 a barrel on Monday. Meanwhile, after slumping $22.60 to $2,003.80 an ounce in the previous session, gold futures are climbing $12.50 to $2,016.30 an ounce.

On the currency front, the U.S. dollar is trading at 133.11 yen compared to the 133.61 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0912 compared to yesterday’s $1.0859.

Asia

Asian stocks closed mostly higher on Tuesday despite uncertainty over the future trajectory of the Federal Reserve’s interest rate hikes and growing risks of a U.S. recession.

Gold gained as the dollar paused after a three-day rally. Oil prices moved higher in Asian trading on expectations that Beijing may take steps to stimulate the economy.

Chinese shares ended flat, with the Shanghai Composite Index finishing marginally lower at 3,313.57 amid soaring tension between China and Taiwan following the Taiwanese president’s visit to the U.S.

The U.S. and the Philippines are holding their largest combat drills in decades after China conducted mock air and sea attacks off the coast of Taiwan.

Hong Kong’s Hang Seng Index climbed 0.8 percent to 20,485.24 as investors reacted to soft inflation data from China.

China’s consumer inflation hit an 18-monht low in March and producer price deflation deepened further, creating room for the central bank to potentially ease its monetary policy.

Japanese shares rallied on dovish comments from the nation’s new central bank governor and reports suggesting that billionaire investor Warren Buffett intends to add to his investments in Japan.

Bank of Japan Gov. Kazuo Ueda indicated late Monday that he intends to continue the current easy monetary policy, including the so-called yield curve control (YCC) program.

The Nikkei 225 Index gained 1.1 percent to settle at 27,923.37, while the broader Topix closed 0.8 percent higher at 1,991.85.

Tech stocks led the surge, with Tokyo Electron and Advantest climbing 3.7 percent and 2 percent, respectively.

Seoul stocks extended gains for a third day running, led by chemical and auto shares.

The Kospi jumped 1.4 percent to close at 2,547.86 as the Bank of Korea held its key interest rate steady at 3.5 percent for the second straight time, as widely expected, amid signs of easing inflation and rising concerns over an economic slowdown.

LG Energy Solution rose 2.4 percent and its parent LG Chem surged 7.5 percent on growing expectations the companies will benefit from a new U.S. law on giving subsidies to electric vehicle buyers.

Automaker Hyundai Motor rallied 3.3 percent and its affiliate Kia Corp. added 4.9 percent on a positive earnings outlook for this year.

Australian markets advanced amid broad-based gains as traders returned to their desks after a long holiday weekend.

The benchmark S&P/ASX 200 Index shot up 1.3 percent to 7,309.90, while the broader All Ordinaries Index ended 1.2 percent higher at 7,504.20.

Gold miner Newcrest Mining surged 5.2 percent after receiving a sweetened offer from Newmont Corp.

Europe

European shares are moving higher on Tuesday as traders return to their desks after the long Easter holiday weekend.

After the latest U.S. jobs data pointed to a tight labor market, investors looked ahead to U.S. inflation, industrial production and retail sales data this week for additional clues on the economic and interest rate outlook.

Minutes of the Fed’s March 21-22 policy meeting also remain on investors’ radar.

Closer to home, the Eurozone Sentix Investor Confidence index improved to -8.7 in April from -11.1 in March.

Separate data showed U.K. retail sales grew slightly less than the previous month in March despite lower volumes year-on-year.

While the French CAC 40 Index has advanced by 0.8 percent, the U.K.’s FTSE 100 Index and the German DAX Index are both up by 0.3 percent.

Miners Anglo American, Antofagasta and Glencore have all moved notably higher on expectations of potential stimulus from China.

German automaker BMW has also risen after posting significant growth in its global sales of fully electric vehicles in the first quarter of 2023.

Meanwhile, Evotec SE has fallen. The biotech firm is on high alert after a late week cyberattack prompted the company to shut down its network.

Scottish oil and gas firm Harbour Energy has also dropped, while BP Plc has edged higher after they entered into an agreement to develop the Viking CCS transportation and storage project.

U.S. Economic Reports

The Treasury Department is scheduled to announce the results of this month’s auction of $40 billion worth of three-year notes at 1 pm ET.

At 1:30 pm ET, Chicago Federal Reserve President Austan Goolsbee is due to speak before a hybrid Economic Club of Chicago Forum Luncheon.

Stocks In Focus

Shares of WW International (WW) are soaring in pre-market trading after Goldman Sachs upgraded its rating on the weight loss company’s stock to Buy from Neutral and predicted the stock could triple in value.

Vehicle retailer CarMax (KMX) is also likely to see initial strength after reporting fiscal fourth quarter earnings that exceeded analyst estimates.

On the other hand, shares of Moderna (MRNA) may come under pressure after the biotechnology company said a final-stage study of its flu vaccine would continue, as the trial did not meet the statistical threshold necessary to declare early success.