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Stocks Gain as Inflation Moderates, Central Banks Stay Put
10-Apr-19 16:25 ET
Dow +6.58 at 26157.16, Nasdaq +54.97 at 7964.24, S&P +10.01 at 2888.21

https://www.briefing.com/investor/markets/stock-market-update/2019/4/10/stocks-gain-as-inflation-moderates-central-banks-stay-put.htm

[BRIEFING.COM] The S&P 500 gained 0.4% on Wednesday, as moderating inflation and assurance from central banks to keep rates on hold provided the broader market some support. The Nasdaq Composite (+0.7%) and the Russell 2000 (+1.4%) both outperformed, while the Dow Jones Industrial Average (unch) finished little changed.

The European Central Bank's (ECB) rate decision and the minutes for the FOMC March meeting provided no surprises for the market. In short, both acknowledged risks to the economic outlook, the ECB said it will keep interest rates unchanged through at least the end of 2019, and the Fed remains content to operate in a wait-and-see mode.

The Consumer Price Index for March, meanwhile, showed the core rate of inflation moderate on a year-over-year basis to 2.0% from 2.1% in February. This moderation helped strengthen the Fed's stance to keep a patient mindset, which should further increase the appeal for risk assets.

Stocks drifted with modest gains throughout the day as the market digested the news. A turnaround from the S&P 500 financial sector (+0.3%) and an announcement from Treasury Secretary Steven Mnuchin that the U.S. and China have agreed to an enforcement mechanism helped solidify the positive bias.

The financial sector was down as much as 0.5% as CEOs from the nation's biggest banks participated in a tense Q&A session with House Financial Services Committee. The event was meant to update the committee on the state of the industry, but nothing new arose for the market as it understood that banks are in a much better capital position than they were ten years ago.

Leadership from heavily-weighted information technology sector (+0.7%) was a major contributor to the day's advance. On a related note, Apple (AAPL 200.62, +1.12, +0.6%) was downgraded to Reduce from Hold at HSBC, but the stock was able to brush off early weakness to finish higher.

In other corporate news, Delta Air Lines (DAL 57.86, +0.91, +1.6%) beat earnings estimates and increased its full-year revenue growth outlook. Shares of Lyft (LYFT 60.12, -7.32) dropped 10.9% amid news that Uber (UBER) is expected to disclose its IPO prospectus (S-1 filing) on Thursday.

U.S. Treasuries finished the day higher, helped by the notion that the Fed will stay put. The 2-yr yield decreased three basis points to 2.31%, and the 10-yr yield decreased two basis points to 2.48%. The U.S. Dollar Index declined 0.1% to 96.93. WTI crude rose 0.8% to $64.56/bbl amid reports that OPEC oil production fell to its lowest level in four years.

Reviewing Wednesday's economic data, which included the Consumer Price Index for March and the weekly MBA Mortgage Applications Index:

Total CPI increased 0.4% month-over-month in March (Briefing.com consensus +0.3%), which was driven mostly by a 3.5% increase in the energy index. Core CPI, which excludes food and energy, was up just 0.1% (Briefing.com consensus +0.2%).
The key takeaway from the report is that the core rate of inflation moderated on a year-over-year basis to 2.0% from 2.1% in February, which is a trend that should keep the Federal Reserve comfortable with its position of being on hold.
The weekly MBA Mortgage Applications Index decreased 5.6% following an 18.6% increase in the prior week.

Looking ahead, investors will receive the Producer Price Index for March and the weekly Initial and Continuing Claims report on Thursday.

Nasdaq Composite +20.0% YTD
Russell 2000 +17.3% YTD
S&P 500 +15.2% YTD
Dow Jones Industrial Average +12.1% YTD