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Market Snapshot

https://www.briefing.com/stock-market-update

Dow 34220.36 -87.72 (-0.26%)
Nasdaq 13371.56 -40.38 (-0.30%)
SP 500 4397.45 -15.08 (-0.34%)
10-yr Note +5/32 2.724
NYSE Adv 1588 Dec 1604 Vol 873.0 mln
Nasdaq Adv 1920 Dec 2533 Vol 4.8 bln

Industry Watch
Strong: Energy, Consumer Discretionary
Weak: Health Care, Financials, Communication Services

Moving the Market

-- Stocks fade early gains

-- Better-than-feared CPI report

-- Treasury yields drop

-- S&P 500 falls back below 50-day moving average (4425)

Investors sell early rally effort
12-Apr-22 16:15 ET
Dow -87.72 at 34220.36, Nasdaq -40.38 at 13371.56, S&P -15.08 at 4397.45

[BRIEFING.COM] The S&P 500 declined 0.3% on Tuesday, fading an early 1.3% gain that was rooted in hopes that inflation rates could be peaking. The Nasdaq Composite (-0.3%) and Dow Jones Industrial Average (-0.3%) followed similar price action, while the Russell 2000 (+0.3%) eked out a gain.

Seven of the 11 S&P 500 sectors closed lower after each spent time in positive territory during the day. The financials (-1.1%) and health care (-1.0%) sectors declined at least 1.0%, while the energy (+1.7%), utilities (+0.4%), and consumer discretionary (+0.2%) sectors closed higher.

Early in the day, the Consumer Price Index (CPI) report for March was being construed as a sign of peak inflation and a corresponding excuse to rally. Total CPI rose 1.2% m/m, as expected, while core CPI, which excludes food and energy, increased by just 0.3% (Briefing.com consensus 0.5%).

The fast start for the market was further supported by technical factors as the S&P 500 temporarily reclaimed its 50-day moving average (4424) and short-covering activity among investors caught off guard by the market's positive reaction to the CPI data.

The rally excuse also pertained to the Treasury market, where the 2-yr yield subsequently dropped 11 basis points to 2.39% and the 10-yr yield dropped six basis points to 2.73%. The U.S. Dollar Index topped the 100.00 level (100.31, +0.37, +0.4%) for its ninth-straight advance.

Unfortunately, the stock market proceeded to drift lower the rest of the day amid a lack follow-through buying interest and a violation of the S&P 500's 50-day moving average. The benchmark index closed below the key technical level.

The nervous price action was presumably tied to a recognition that the Fed is poised to hike rates by 50 basis points next month, underlying growth concerns, uncertainty regarding corporate guidance this earnings season, and disappointing earnings reactions in CarMax (KMX 93.33, -9.84, -9.5%) and Albertsons (ACI 31.97, -2.81, -8.1%).

Oil prices reclaimed $100.00 per barrel ($100.69, +6.53, +6.9%), which was cited as an additional drag on sentiment, although the rebound corresponded with the good news that Shanghai started to relax some COVID-19 restrictions.

American Airlines (AAL 17.13, +0.16, +0.9%), meanwhile, provided a lift for the airline industry after raising its Q1 revenue guidance. As a reminder, JPMorgan Chase (JPM 131.54, -1.46, -1.1%) will report earnings prior to Wednesday's open.

Reviewing Tuesday's economic data:

Total CPI increased 1.2% month-over-month in March, as expected, while core CPI, which excludes food and energy, increased a smaller-than-expected 0.3% (Briefing.com consensus 0.5%). That left total CPI up 8.5% year-over-year, the highest 12-month increase since December 1981, and core CPI up 6.5% year-over-year, the highest 12-month increase since August 1982.
The key takeaway from the report is that it is subject to widening interpretations. The popular narrative is that it's hard to believe things will get any worse; therefore, this report is "good" because it must mark peak inflation. The less popular, but practical, narrative is that this report reveals a broadening in inflation pressures that will push the Fed to raise rates by 50 basis points at the next FOMC meeting.
The Treasury Budget showed a $192.7 bln deficit in March versus a $659.6 bln deficit in the same period a year ago. The budget data is not seasonally adjusted, so the March deficit cannot be compared to the February deficit of $216.6 bln.
The budget deficit over the last 12 months is $1.74 trln versus a deficit of $2.20 trln in February.
The NFIB Small Business Optimism Index for March decreased to 93.2 from 95.7 in February.

Looking ahead, investors will receive the Producer Price Index for March and the weekly MBA Mortgage Applications Index on Wednesday.

Dow Jones Industrial Average -5.8% YTD
S&P 500 -7.7% YTD
Russell 2000 -11.5% YTD
Nasdaq Composite -14.5% YTD

Crude futures reclaim $100 per barrel
12-Apr-22 15:30 ET
Dow -188.12 at 34119.96, Nasdaq -84.01 at 13327.93, S&P -29.15 at 4383.38

[BRIEFING.COM] The S&P 500 is trading at session lows with a 0.6% decline while the Russell 2000 trades flat.

Nine of the 11 S&P 500 sectors are trading lower with financials (-1.4%), health care (-1.3%), and communication services (-1.2%) down over 1.0%. The energy (+1.5%) and utilities (+0.2%) sectors, however, are still trading higher.

WTI crude futures settled higher by $6.53 (+6.9%) to $100.69/barrel amid a report from Reuters indicating that Shanghai is relaxing some COVID-19 restrictions.