US stocks fell on Tuesday as investors bide their time until a headline inflation report is released and may shed light on the path of interest rates.
By mid-morning trading, all three major indexes had reversed the previous session's gains. The Dow Jones Industrial Average (^DJI) led the downward trend, falling about 0.7%, or more than 250 points. The S&P 500 (^GSPC) fell about 0.6%, while the Nasdaq Composite (^IXIC) fell about 0.3%.
Stocks are deserted ahead of Wednesday's CPI release, which is seen as a pivotal point for a market facing a slower rise after a strong first quarter.
Investors are becoming increasingly less convinced that the Federal Reserve will implement the three interest rate cuts it expects for this year, given the ongoing show of strength in the US economy. This has intensified focus on the March CPI reading, and any sign that inflation is starting to slow again will be seen as a call for a policy change in June.
Meanwhile, fading hopes for a rate cut have helped push the 10-year Treasury yield (^TNX) near five-month highs — another potential headwind for stocks, with the 5% level seen as the main point of concern. The benchmark yield fell about 5 basis points on Tuesday to trade around 4.4%.
At the same time, rising metal prices have raised concerns about its impact on inflation. The price of copper (HG=F), a key industrial input, rose 0.7% early Tuesday, adding to a 10% year-to-date gain and sparking talk of a new bull market. Gold (GC=F) rose above $2,380 per ounce, extending its rise to reach another new record high.
Another catalyst on the horizon is the start of Q1 earnings season, which begins in earnest on Friday with results from the likes of Citigroup (C), JPMorgan (JPM), and Wells Fargo (WFC).
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Teens are clamping down on spending, but not everywhere
Teens are tightening up their spending, according to the latest 'assessment' research released by Piper Sandler this morning.
The spring survey showed that teens' “self-reported” spending fell 6% year over year to $2,263, and has risen only 1% since the fall.
The biggest winner in the category is cosmetics.
Beauty spending is at the highest level since the spring of 2018, which is interesting in the sense that Ulta (ULTA) CEO David Kimball warned last week of an industry slowdown (its stock price has taken a nosedive). The survey showed that Elf Beauty (ELF) had the largest market share compared to its competitors.
Teenagers put pressure on their spending. (Piper Sandler) -
The computer continues to recover
Keep an eye on stocks of computer makers Dell (DELL) and HP Inc. (HP) today.
PC maker Canalys said Tuesday that total shipments of desktop and laptop computers It grew 3.2% annually to 57.2 million units In the first quarter. The research team says this is a sign of building demand ahead of upcoming catalysts later this year, such as the arrival of AI-powered PCs and the Windows 11 operating system update.
“Growth in the first quarter of 2024 bodes well for a strong PC market throughout the year,” said Ishan Dutt, principal analyst at Canalys. “Vendors and the channel have been working through some of the final stages of inventory corrections, and macroeconomic conditions in some markets continue to limit demand. But the strength of the opportunity to upgrade, especially from corporates, is beginning to emerge. The market is expected to go from strength to strength in the coming quarters.” “Customers are prioritizing upgrades in preparation for a large-scale migration to Windows 11.”
The computer continues to recover. (Canalys)
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