By Barbara Kollmeyer, MarketWatch , Ryan Vlastelica
Apprehension builds ahead of Wednesday's CPI data
U.S. stocks were little changed on Tuesday, with major indexes
recovering off their lows of the session as investors held off on
making big bets ahead of coming data on inflation, which could
prove a key catalyst.
The day's action was relatively subdued, following several
sessions with 1% moves in both directions. Major indexes are coming
off their biggest two-day rally in about a year-and-half, as well
as their worst weekly performance, in terms of percentage moves,
since early 2016.
What are main benchmarks doing?
The Dow Jones Industrial Average fell 88 points, or 0.4%, to
24,506. The S&P 500 index slipped 8 points, or 0.3%, to 2,647.
The Nasdaq Composite Index rose 5 points to 6,977, a gain of less
than 0.1%.
Major indexes are coming off their second straight session with
a 1% advance, a rally that represents the best two-day percentage
gain for the Dow since June 29, 2016, and the best such stretch for
both the S&P 500 and the Nasdaq since June 30, 2016. However,
all three major indexes remain more than 7% below record levels hit
last month, following massive declines seen over last week. Less
than halfway through February, the market has already matched
(http://www.marketwatch.com/story/this-one-statistic-shows-how-earth-shattering-stock-moves-have-been-this-year-2018-02-08)
the number of 1% moves seen over all of 2017.
Need to know: 'Risks of a recession' are rising, says Ray Dalio
(http://www.marketwatch.com/story/risks-of-a-recession-are-rising-says-ray-dalio-2018-02-13)
What's driving the markets?
Opinion:Blame machines for the stock market's wild swings, but
the response is all on you
(http://www.marketwatch.com/story/blame-the-machines-for-stock-market-selloff-but-the-response-is-all-on-you-2018-02-12)
In addition, there was hesitation overseas, with European stocks
failing to follow Wall Street's lead and Asia giving up some gains
by the close.
The next big clue for market direction could come from
Wednesday's January consumer-price-inflation data. There are
concerns that if CPI comes in higher than expected, it could spark
another selloff, as worries about higher prices and its effect on
the Federal Reserve's interest-rate hiking plans triggered last
week's dramatic volatility and declines.
See:Why Valentine's Day may represent the next big test for the
stock market
(http://www.marketwatch.com/story/weeks-inflation-data-is-seen-as-the-markets-next-big-tests-2018-02-12)
Economists polled by MarketWatch
(http://www.marketwatch.com/story/inflation-fears-haunt-wall-street-again-but-investors-might-just-be-having-a-bad-dream-2018-02-10)are
expecting at 0.4% rise for headline inflation, and a 0.2% gain for
core inflation, which strips out food and energy costs.
Investors have also been considering a $4.4 trillion federal
budget that U.S. President Donald Trump has proposed, which would
see the deficit nearly double in 2017 and rise some $7 trillion
over the next decade. Of course, few expect the budget in its
current form will be enacted by Congress, especially given it
pushes for deep cuts in social programs. But the tax cuts signed
into law in December and the spending deal reached last week are
already seen ballooning the deficit.
Read: Here's the nagging question at the heart of the
stock-market selloff
(http://www.marketwatch.com/story/heres-the-nagging-question-at-the-heart-of-the-stock-market-selloff-2018-02-12)
What are strategists saying?
"If inflation continues to pick up, the equity market will
continue to struggle from here. If worries about inflation come
true, the problem is that central banks will have no choice but to
raise rates, which won't just have an impact on the equity markets
but also on the real economy," said Nick Clay, the lead manager of
the BNY Mellon Global Equity Higher Income Fund.
"The recent 10% correction basically just unwound the gains we
saw over January. Valuations remain high; the U.S. is one of the
most expensive markets in the world. I think volatility will remain
elevated, and we could easily see another 15% downside. Only then
will valuations start to become a little more reasonable."
Read:5 great questions Americans are asking about the market's
crazy ride
(http://www.marketwatch.com/story/reddit-users-have-questions-about-the-stock-market-and-we-have-the-answers-2018-02-07)
(http://www.marketwatch.com/story/reddit-users-have-questions-about-the-stock-market-and-we-have-the-answers-2018-02-07)Which
stocks are active?
AmerisourceBergen Corp.(ABC) shares jumped about 8% after
Walgreens Boots Alliance Inc.(WBA) reportedly made a takeover
approach for the drug distributor,
(http://www.marketwatch.com/story/walgreens-makes-takeover-bid-for-drug-distributor-amerisourcebergen-2018-02-12)
according to sources cited by The Wall Street Journal. Shares of
Walgreens rose 0.4%.
Under Armour Inc.(UAA) shares rose 17% after the sports gear
maker posted stronger-than-expected revenue
(http://www.marketwatch.com/story/under-armour-shares-surge-85-after-revenue-beat-2018-02-13).
Blue Apron Holdings Inc. (APRN) jumped 6% after losses that were
smaller than expected and revenue beat forecasts
(http://www.marketwatch.com/story/blue-apron-shares-spike-after-revenue-beats-expectations-2018-02-13).
PepsiCo Inc.(PEP) rose 0.3% after the company reported
fourth-quarter results
(http://www.marketwatch.com/story/pepsicos-stock-slumps-as-results-offset-raised-dividend-new-15-billion-buyback-program-2018-02-13)
that showed a decline in beverage and snack sales, though it also
raised its dividend and announced a new buyback program.
Cisco earnings:High hopes pinned to return to revenue growth
(http://www.marketwatch.com/story/cisco-earnings-high-hopes-pinned-to-return-to-revenue-growth-2018-02-12)
Amazon.com Inc.(AMZN) rose 1.6%. Earlier, a report read the
e-commerce retailer will lay off hundreds of workers
(http://www.marketwatch.com/story/amazon-laying-off-hundreds-amid-hiring-spurt-2018-02-12).
(http://www.marketwatch.com/story/amazon-laying-off-hundreds-amid-hiring-spurt-2018-02-12)General
Motors Co.(GM) lost 0.9% after the auto maker said it would close
an auto plant in South Korea
(http://www.marketwatch.com/story/gm-to-close-auto-plant-in-south-korea-2018-02-12),
affecting 2,000 workers and leading to a charge of $850
million.
What's on the economic docket?
Federal Reserve Chairman Jerome Powell said the central bank
will "remain alert" to any risks
(http://www.marketwatch.com/story/powell-says-fed-will-remain-alert-to-any-financial-stability-risks-2018-02-13)
to financial stability, marking his maiden attempt to soothe
financial markets.
Cleveland Fed President Loretta Mester said the sharp moves in
the stock market over the past 10 days remain "far away"
(http://www.marketwatch.com/story/feds-mester-economy-will-work-through-this-episode-of-market-turbulence-2018-02-13)
from being large enough to spill over and damage the economy.
The index of small-business optimism from the National
Federation of Independent Businesses climbed two points
(http://www.marketwatch.com/story/small-business-sentiment-throttles-higher-as-plans-to-expand-hit-record-high-nfib-says-2018-02-13)
to a reading of 106.9 in January.
What are other assets doing?
Europe stocks
(http://www.marketwatch.com/story/european-stocks-head-lower-after-wall-street-fails-to-rebound-2018-02-08)traded
lower
(http://www.marketwatch.com/story/european-stocks-run-into-the-red-as-wall-street-sets-course-for-pullback-2018-02-13),
while in Asia, Japan's Nikkei 225 dropped 0.6%, bucking a mostly
stronger session for other indexes
(https://www.npr.org/2018/02/12/584531641/when-did-marriage-become-so-hard).
The dollar was under pressure
(http://www.marketwatch.com/story/dollar-slides-vs-yen-as-investors-weigh-up-recent-stock-gains-2018-02-13),
chiefly against the Japanese yen , dropping 0.9% to Yen107.72. The
ICE U.S. Dollar Index fell 0.54% to 89.722. Gold futures rose 0.4%
as the dollar weakened
(http://www.marketwatch.com/story/gold-looks-to-extend-recovery-as-stocks-dollar-retreat-2018-02-13).
The yield on 10-year Treasury notes was at 2.84%.
Read:This chart warns that the 30-year downtrend in interest
rates may be over
(http://www.marketwatch.com/story/is-the-decades-long-downtrend-in-interest-rates-finally-over-2018-02-08)
Crude-oil traded lower as the International Energy Agency said
booming U.S. shale supply will likely overwhelm oil demand and
weigh on prices this year
(http://www.marketwatch.com/story/booming-us-shale-supply-will-overwhelm-oil-demand-says-iea-2018-02-13).
Bitcoin slipped around 4% to $8,544.
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(END) Dow Jones Newswires
February 13, 2018 11:09 ET (16:09 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.