The Nasdaq Composite was higher Wednesday as investors grew optimistic after a tamer-than-expected inflation report.
But both the Dow Jones Industrial Average and S&P 500 traded lower. The Dow lost 180 points, or 0.5%, to 33,384.48 as shares tied to economic growth declined. The S&P 500 added pulled back 0.1%.
April consumer prices increased 4.9% from a year ago, which was less than the 5% annual increase expected by economists polled by Dow Jones. Month-over-month inflation matched expectations with a 0.4% increase in April.
Overall market gains were contained as cyclical stocks, which are most closely linked to the economy, traded lower. Shares like Nike and Caterpillar were in the red as some investors reasoned that inflation was slowing because a recession is imminent or the country was already in one.
“Optimism for the disinflation process to remain in place is high as this report showed shelter prices remain elevated, which just means the lag we are seeing with rent prices should start meaningfully show over the few months,” said Ed Moya, senior market analyst at Oanda. “Inflation should continue to decline over the next few months, but falling back to 2% will be a lot harder given the strength in the labor market.”
Treasury yields tumbled following the report, further supporting a stock market which has been worried about higher rates snuffing out economic growth. The yield on 2-Year Treasury fell 7.5 basis points to 3.949%, while 10-year declined 6 basis points. Shares of tech stocks like Alphabet, Nvidia and Tesla gained.
Airbnb and Twilio fell 11.5% and 16%, respectively, on weak forecasts. Electric vehicle maker Rivian popped 9% on a narrower-than-expected loss. Earnings season continues Wednesday with results from Disney and Robinhood.
Wall Street monitored the latest updates on the U.S. debt ceiling as worries mount that failing to reach a resolution before the June 1 deadline could lead to default. President Joe Biden held a key meeting with congressional leaders after the bell Tuesday, but comments from leadership on both sides of the aisle suggested that little progress was made.
Source : CNBC