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Nasdaq up ~1%, S&P 500 gains ~0.3%, DJI slips
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Tech leads S&P 500 sector gainers; energy weakest group
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Euro STOXX 600 index off ~0.3%
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Dollar dips; crude slides >1.5%; gold and bitcoin gain
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U.S. 10-Year Treasury yield falls to ~3.47%
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NASDAQ LEADS RALLY WITH FED PAUSE BETS (1013 EDT/1413 GMT) Wall Street's major indexes are mixed early on Wednesday as investors breathed a sigh of relief after April's inflation data came in mostly as expected.
While it has since pared gains, the tech-heavy Nasdaq hit its highest intraday level since August 2022 after the news. It likely helped rate-sensitive technology stocks as traders strengthened bets the Federal Reserve would end its interest-rate hike campaign after the inflation data appeared to show signs of progress in the Fed's fight against soaring prices. Most of the 11 major S&P 500 industry sectors are advancing with tech and consumer discretionary jostling each other for the top gainer prize. Energy is weakest group as oil prices are falling. Shares in Google parent Alphabet Inc are boosting the communication services index as the Web search company is expected to unveil more artificial intelligence in its products in answer to the latest competition from Microsoft Corp , which has threatened its perch atop the nearly $300-billion search advertising market. Microsoft is advancing on Wednesday, but at a slower pace than Alphabet.
Meanwhile, the U.S. government standoff over the debt ceiling is having a less positive impact with the cost of insuring exposure to U.S. government debt rising after talks between President Joe Biden and top lawmakers did not break a deadlock over raising the $31.4 trillion U.S. borrowing limit. Here is your morning snapshot from 1010 EDT:
(Sinéad Carew)
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U.S. STOCK FUTURES CHEER ROUGHLY IN-LINE CPI (0900 EDT/1300 GMT) U.S. equity index futures have strengthened in the wake of the release of the latest data on U.S. inflation. The April CPI, on a month-over-month basis, was in-line with the estimate, while the year-over-year number came in below the Reuters Poll. The month-over-month and year-over-year core readings were in-line with estimates:
According to the CME's FedWatch Tool, the probability that the FOMC will leave rates unchanged at their June 13-14 meeting is now 85% from 80% just before the numbers were released. There is now around a 15% chance of a 25 basis point increase vs 20% prior to the data coming out. CME e-mini S&P 500 futures are rallying around 0.8%. The futures were just below flat in the moments before the numbers came out.
All S&P 500 sector SPDR ETFs are quoted higher in premarket trade with consumer discretionary and communication services posting the biggest gains. XLY and XLC are up around 1% each. Regarding the inflation data, Kenny Polcari, chief market strategist at Slatestone Wealth, said: “I don’t necessarily think it’s a blazing bullish report but it’s going to give some people the option to argue for a pause and a pivot from the Fed, which I don’t think is the case. I think the Fed will raise rates again in June and then pause. I don’t see a pivot in all of 2023.” Polcari added "Futures were up because it wasn’t a stronger number. Futures went from being nervous to now being bullish that the Fed is making progress and is not going to raise rates any more."
Here is a premarket snapshot from shortly before 0900 EDT:
(Terence Gabriel, Sinéad Carew)
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
