U.S. Stocks Lack Direction After Inflation Unexpectedly Edge Higher

Barry Adams
12 Mar, 2024
New York City

Stocks rebounded in Tuesday's trading after struggling in the previous two sessions in a row after the overall inflation in February met investors' expectations. 

The S&P 500 index advanced 0.5%, and the Nasdaq Composite gained 0.8%. 

Market sentiment has remained positive after healthy labor market conditions and the easing of inflation have reaffirmed the resilience of the US. economy. 

 

U.S. Consumer Inflation Unexpectedly Edge Higher

Consumer price inflation in February unexpectedly increased to 3.2% from 3.1% in the previous month, the U.S. Bureau of Labor Statistics reported Tuesday. 

The rising cost of shelter and gasoline contributed about 60% of overall inflation as rents continued to rise across the nation. 

On a monthly basis, inflation held steady at 0.4% and matched the rate in January. 

Core inflation, which excludes food and energy prices, rose at a slower annual pace of 3.8%, compared to 3.9% in January. 

Prices of food, shelter, new vehicles, and medical care continued to rise, but at a slower pace in the month. 

Food price inflation slowed to 2.2% from 2.6%, housing costs eased to 5.7% from 6.0%, new vehicle prices rose 0.4% from 0.6%, and medical care inflation eased to 2.9% from 3.0%. 

However, transportation costs accelerated to 9.9%, compared to 9.5% in the previous month. 

 

U.S. Indexes and Yields

The S&P 500 index increased 0.5% to 5,210.50, and the Nasdaq Composite advanced 0.8% to 16,022.73. 

The yield on 2-year Treasury notes increased to 4.53%, 10-year Treasury notes inched up to 4.09%, and 30-year Treasury bonds edged down to 4.26%.

WTI crude oil decreased $0.13 to $77.83 a barrel, and natural gas prices increased 5 cents to $1.81 a thermal unit.

Gold decreased by $7.22 to $2,179.44 an ounce, and silver rose 2 cents to $24.45. 

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 102.94.

 

U.S. Stock Movers

Oracle Corp. increased 11.5% to $127.26 after the database and cloud computing company reported better-than-expected quarterly earnings. 

Kohl's Corp. declined 2.5% to $26.50 after the department store chain operator reported better-than-expected quarterly results but issued a weak outlook.

On Holding plunged 14.5% to $28.75 after the Swiss shoemaker reported weaker-than-expected revenue of CHF 447.0 million and net income swung to a loss of 5 Swiss cents per share. 

Southwest Airlines declined 8.5% to $30.93 after the regional airline said it plans to reduce its capacity and reevaluate its financial projections for 2024 in light of persistent aircraft deliveries from its sole supplier, Boeing. 

The airline also said leisure revenue in the first quarter was lighter than expected and estimated unit revenue to range from a flat to a 2% increase from a year ago, but lower than an increase of as much as 4.5%.