Stocks End Lower Despite Better Inflation Data
4:06 pm Tuesday, September 14th, 2021
US stocks have been losing ground on Tuesday as investors looked past lower-than-expected inflation data, focusing instead on economic uncertainties and growing chances of a corporate tax rate hike.
Starting with the data, total CPI increased 0.3% m/m (Briefing.com consensus +0.4%) while core CPI, which excludes food and energy, increased just 0.1% (Briefing.com consensus +0.3%). On a year-over-year basis, they were up 5.3% and 4.0%, respectively. That indicated a moderation versus the yr/yr increases in July.
The futures market reacted positively to the data since it suggested the Fed might feel less pressured to hurry a taper announcement, but others are viewing the report as a byproduct of slower economic growth.
Nine of the 11 S&P 500 sectors are currently trading in negative territory, led lower by the financials sector (-1.1%) with a 1.1% decline as the Treasury market succumbs to some curve-flattening activity. The information technology (+0.2%) and health care (+0.1%) sectors trade slightly higher.
Besides the inability to hold another positive open, risk sentiment has been pressured by news of a Chinese province entering lockdown because of the Delta variant, cautious-sounding business commentary, a disappointing earnings reaction in Oracle (ORCL), and yesterday’s news of Democrats’ plans for tax increases.
Briefly relaying some of the commentary, American Express (AXP) said corporate spend on travel isn’t showing signs of increasing in a meaningful way, Comcast (CMCSA) said net adds in cable business are seeing a slowdown since the tail end of August, and PNC (PNC) said net interest income is a looking a bit soft.
Apple (AAPL) was trading slightly lower ahead of its product event, which should begin momentarily. Fellow mega-cap Microsoft (MSFT) was showing some strength, and contributing to the relative outperformance of the Nasdaq, after Morgan Stanley raised its price target on the stock to $331 from $305.
In the Treasury market, the 10-yr yield down four basis points to 1.28% after touching 1.35% prior to the CPI data. The 2-yr yield is unchanged at 0.21%.
