Stocks Hold Gains As Traders Opt To Challenge Fed On Hot Inflation Data; Bonds, Gold Fall: 10 ETFs Moving Tuesday

Zinger Key Points
  • February 2024 inflation report fails to unsettle investors despite higher figures, maintaining positive sentiment.
  • Key ETF movements post-CPI report: Bonds decline, precious metals dip, stocks hold premarket gains.

An inflation report showing higher-than-anticipated figures in February 2024, following a similarly hot January report, failed to unsettle investors on Tuesday morning trading.

The consumer price index (CPI) for February rose by 3.2% compared to the previous year, slightly exceeding both prior and anticipated rates of 3.1%. Monthly data aligned with expectations, showing a 0.4% increase.

However, the core CPI index, which excludes volatile components such as energy and food items, surpassed expectations by registering a 3.8% annual increase, compared to the anticipated 3.7% predicted by economists.

Despite these developments, market expectations for a rate cut in June remained largely unchanged, with a 70% probability. Traders remained attentive to the possibility of four potential rate cuts by the year’s end.

Following the opening bells, immediate responses indicate a steady positive sentiment in risky assets, as major U.S. indices kept premarket gains.

Tuesday’s ETF Movers Following CPI Report

  • Bonds fall: Treasury yields moved higher after the higher-than-expected CPI report. The iShares 20+ Year Treasury Bond ETF TLT, reflecting the performance of longer-dated Treasury securities, fell 0.7% at 10:00 a.m. in New York, on track for the fourth straight days of losses.
  • Precious metal falls: Rate-sensitive commodities such as gold and silver fell. The SPDR Gold Trust GLD fell 0.9%, on track to snap a nine-day winning streak.
  • Stocks keep premarket gains: The SPDR S&P 500 ETF Trust SPY traded 0.3% higher for the session, erasing premarket gains. The top-performing stock within the S&P 500 was Oracle Corp. ORCL, up 11%, while Southwest Airlines Co. LUV was the main laggard, down 13%. The tech-heavy Invesco QQQ Trust QQQ was 0.4% higher.
  • Among sectors, the Consumer Staples Select Sector SPDR Fund XLP outperformed, up 0.4%. The Utilities Select Sector SPDR Fund XLU fell 0.4%, lagging behind.
  • Industry-wise, the worst performers were the U.S. Global Jets ETF JETS, the Invesco Solar ETF TAN and the VanEck Gold Miners ETF GDX, down 3.2%, 2.9% and 2.1%, respectively.
  • Semiconductors, as tracked by the VanEck Semiconductor ETF SMH, rose 0.9%, attempting to rebound following Monday’s 1.7% decline. Among chipmakers, Taiwan Semiconductor Manufacturing Company TSMC rose 3%, followed by Nvidia Corp. NVDA up 2.7%.

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