U.S. Stocks May See Early Strength Following Inflation Data

wallstreet oct05 14mar23 lt

Following the mixed performance seen in the previous session, stocks are likely to move to the upside in early trading on Tuesday. The major index futures are currently pointing to a higher open for the markets, with the S&P 500 futures up by 0.8 percent.

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.

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.

In overseas trading, stock markets across the Asia-Pacific region moved sharply lower during trading on Tuesday. Japan's Nikkei 225 Index tumbled by 2.2 percent, while Hong Kong's Hang Seng Index plunged by 2.3 percent.

European stocks have also moved to the upside on the day. 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.

In commodities trading, 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.

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