The futures markets are not far from breakeven levels this morning following a record close for the S&P 500 on Tuesday. There is little economic news coming out today following yesterday’s Consumer Price Index (CPI) report that showed that year-over-year inflation was up around 3.2% in February, or 3.8% when excluding volatile food and energy costs. The inflation figures in that report were slightly higher than expected, but did little to affect expectations of interest-rate cuts later this year. Additionally, very few earnings outcomes have impacted investor sentiment this morning, suggesting a tepid start to the trading day.
The markets traded well yesterday, shooting higher after the release of the CPI report, which tended to support traders’ interest-rate expectations for 2024. What’s more, earnings results at software maker Oracle Corp. (ORCL) came in better than expected, boosted by growing demand for artificial intelligence (AI) applications. Other tech companies with AI-related offerings also moved up in tandem. This trend continued throughout most of the day, sending the S&P 500 to an all-time high. Overall, the S&P 500 rose 57 points (up 1.12%), the NASDAQ increased 246 points (up 1.54%), and the Dow Jones Industrial Average rose 236 points (up 0.61%). Moreover, market breadth was slightly positive, as advancers outpaced decliners by a 1.2-to-1.0 ratio. Technology issues were among the best performers, aided by significant outperformance from both Oracle and NVIDIA (NVDA). All other sectors significantly underperformed tech, and utilities equities traded lower yesterday.
In commodity news, oil prices were choppy throughout the trading session, but did rise in the final portion of the day, benefiting from a Department of Energy report of inventory draws occurring over the past week. Still, oil has largely been trading between $75 and $80 per barrel over the past month, suggesting little change in the market. Elsewhere, U.S. Treasury bond yields were mixed, with short-term rates rising and long-term rates falling. The Chicago Board Options Exchange Volatility Index (VIX) fell significantly as optimism made demand for options protection decline.
Several economic reports will be released in the days ahead. The Producer Price Index (PPI), which helps the Federal Reserve keep an eye on wholesale inflation, is slated to be released on Thursday. U.S. Retail sales for February will also be released that day. On Friday, the Empire State Manufacturing Survey, the Import Price Index, and industrial production are on the docket. Elsewhere, several dozen small companies are slated to report quarterly results, though readers should note that we are nearing the end of earnings season. - John E. Seibert III
At the time of this article’s writing, the author did not hold positions in any of the companies mentioned.
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