US futures in holding pattern in wait for CPI
US stocks were stuck in a holding pattern on Tuesday as investors bided their time until a key inflation report lands and potentially sheds light on the path of interest rates.
Futures tied to the Dow Jones Industrial Average (^DJI), the S&P 500 (^GSPC), and the tech-heavy Nasdaq 100 (^NDX) were all trading just above the flatline.
Stocks have become marooned ahead of the release of the Consumer Price Index on Wednesday, seen as a pivotal point for a market facing a slower next leg higher after a strong first quarter.
Investors have become increasingly less convinced the Federal Reserve will deliver on the three rate cuts it has projected for this year, given the persistent show of strength in the US economy. That’s intensified the focus on the CPI print for March, with any sign that inflation has begun to cool again seen as an invitation to a June policy shift.
Meanwhile, fading rate-cut hopes have helped push up the 10-year Treasury (^TNX) yield near five-month highs — another potential headwind for stocks, with the 5% level seen as the key point of concern. The benchmark yield slipped on Tuesday to about 4.4%.
At the same time, rising metals prices have sparked concerns about a feed-through effect on inflation. Copper (HG=F), a key industrial input, put on about 0.4% early Tuesday, adding to a 10% year-to-date gain that has prompted talk of a new bull market. Gold (GC=F) climbed as much as 1.1% to $2,365.35 an ounce, extending its rally to hit another fresh record.
Another catalyst on the horizon is the start of first-quarter earnings season, which gets underway in earnest on Friday with results from the likes of Citigroup (C), JPMorgan (JPM), and Wells Fargo (WFC).
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Teens clamp down on spending, but not everywhere
Teens are tightening up their spending, shows Piper Sandler’s latest ‘Taking Stock’ research out this morning.
The spring survey shows that teen “self-reported” spending fell 6% year over year to $2,263, and rose only by 1% from the fall.
The biggest category winner is cosmetics.
Spending on beauty hit the highest level since spring 2018, interesting in the sense that Ulta (ULTA) CEO David Kimbell warned last week of an industry slowdown (his stock price was clobbered). Elf Beauty (ELF) gained the most market share relative to its competitors, the survey showed.
Teens clamp down on their spending. (Piper Sandler) -
The PC recovery continues
Keep an eye on shares of PC makers Dell (DELL) and HP Inc. (HP) today.
PC industry firm Canalys said that total shipments of desktops and notebooks grew 3.2% annually to 57.2 million units in the first quarter. The research outfit says this is a sign of demand building ahead of catalysts later this year such as the arrival of AI PCs and the Windows 11 refresh.
“Growth in the first quarter of 2024 bodes well for a strong PC market throughout the year,” principal analyst at Canalys Ishan Dutt said. “Vendors and the channel have been working through some final stages of inventory corrections, and macroeconomic conditions in certain markets continue to limit demand. But the strength of the refresh opportunity, particularly from businesses, is beginning to come to the fore. The market is set to go from strength to strength in the coming quarters as customers prioritize upgrades in preparation for a large-scale transition to Windows 11.”
The PC recovery continues on. (Canalys)
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