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Stocks Move Mostly Higher On Tame Inflation Data - U.S. Commentary


Stocks have moved mostly higher over the course of morning trading on Tuesday, extending the rally seen in the previous session. The major averages continue to recover from the notably pullback seen last week.

Currently, the Dow is clinging to a modest gain, up 5.50 points or less than a tenth of a percent at 25,656.38. The Nasdaq is up 28.22 points or 0.4 percent at 7,586.29 and the S&P 500 is up 11.93 points or 0.4 percent at 2,795.23.

The strength on Wall Street comes following the release of tame inflation data, which suggests the Federal Reserve will continue to refrain from raising interest rates in the near future.

After reporting no change in consumer prices over the past few months, the Labor Department released a report showing a modest increase in consumer prices in the month of February.

The Labor Department said its consumer price index rose by 0.2 percent in February after coming in unchanged for three straight months. The uptick in consumer prices matched economist estimates.

Excluding food and energy prices, core consumer prices inched up by 0.1 percent in February after rising by 0.2 percent in January. Economists had expected another 0.2 percent increase in prices.

The report also said the annual rate of consume price growth slowed to 1.5 percent in February from 1.6 percent in November, while the annual rate of core consumer price growth edged down to 2.1 percent from 2.2 percent.

With consumer price growth slowing, Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "The Fed would appear to be justified in supporting the real economy by being patient and leaving interest rates on hold for a potentially extended period."

However, a continued decline by Boeing (BA) is limiting the upside for the Dow, with the aerospace giant falling by 4.6 percent after tumbling by 5.3 percent on Monday.

The continued drop by Boeing comes after Edward Jones downgraded its rating on the company's stock to Hold from Buy, citing a possible "delay in orders" after the crash of the second of its 737 MAX jets in less than 6 months.

Oil service stocks are showing another substantial move to the upside on the day, driving the Philadelphia Oil Service Index up by 3 percent.

The rally by oil service stocks comes amid a continued increase by the price of crude oil, with crude for April delivery climbing $0.68 to $57.47 a barrel.

Significant strength has also emerged among gold stocks, which are moving higher along with the price of the precious metal.

With gold for April delivery rising $6.10 to $1,297.20 an ounce, the NYSE Arca Gold Bugs Index is up by 1.5 percent.

Natural gas, tobacco, and steel stocks are also seeing notable strength, moving higher along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index spiked by 1.8 percent, while Hong Kong's Hang Seng Index surged up by 1.5 percent.

Meanwhile, the major European markets have turned mixed on the day. While the German DAX Index is down by 0.2 percent, the French CAC 40 Index is just above the unchanged line and the U.K.'s FTSE 100 Index is up by 0.2 percent.

In the bond market, treasuries have moved modestly higher over the course of the trading session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by nearly a basis point at 2.634 percent.

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