The futures market was well in the green ahead of the release of consumer price index (CPI) data. Stocks had been quite volatile on Tuesday, but traders are looking at technical signs that the market could be in an oversold condition. The latest CPI readings (released at 8:30 Eastern today) showed that headline prices rose 2.8%, year over year (up 0.2%, month over month). When excluding the volatile food and energy components, prices rose 3.1%, year over year (up 0.2%, month over month). Overall, these figures were slightly better than expected and sentiment quickly improved for equities, which jumped higher after the report. The stock futures are well in the green, suggesting a positive start to the trading day.
The major market indices were quite volatile yesterday following several changes in the U.S. tariff policy. Additional 25% tariff on steel and aluminum coming into the U.S. from Canada was proposed, following a Canadian policy that would implement a 25% surcharge on electricity exports to the United States. Readers should note that a 25% tariff on Canadian steel and aluminum was already slated to go into effect on March 12th. Both the U.S. and Canada backtracked somewhat from those positions later in the day, causing significant swings in the major market indices. Overall, the S&P 500 fell 42 points (down 0.76%), the NASDAQ declined 32 points (down 0.18%), and the Dow Jones Industrial Average was lower by 478 points (down 1.14%). Market breadth was quite negative, with decliners outpacing advancers by a 1.5-to-1.0 ratio. All eleven stock market sectors were in the red, though technology stocks were amongst the best performers on a relative basis. On the other hand, industrial equities were amongst the weakest performers.
In commodity news, oil prices fell significantly yesterday as fears of a slowdown in trade and global growth were priced into the commodity. Additionally, Ukraine has agreed to accept a U.S. proposal for an interim 30-day ceasefire with Russia, which many traders thought could be a signal of a coming de-escalation in the conflict, if Russia accepts the framework. Elsewhere, U.S. Treasury bond yields were a mixed bag, but those with longer durations tended to rise more than those with a shorter term. The Chicago Board Options Exchange Volatility Index, or VIX, commonly known as the fear index, declined yesterday, following a significant rise since late February.
Several economic reports will be released in the days ahead. This includes initial jobless claims and core and non-core producer price index (PPI) indices on Thursday. On Friday, the University of Michigan’s consumer sentiment index is scheduled for release. Elsewhere, a few dozen companies are slated to release quarterly results, though these are often smaller enterprises. - John E. Seibert III
At the time of this article’s writing, the author held positions none of the companies mentioned.
CLICK HERE for more information on our services or call 1-800-VALUELINE (1-800-825-8354). Our account managers are available Monday through Friday, 8:00 AM to 6:00 PM Eastern Time.
