Wall Street saw a modest uptick on Tuesday as investors turned their focus to upcoming US inflation data following a better-than-expected producer price index (PPI) report.
The Dow Jones Industrial Average climbed 225 points (0.5%), while the S&P 500 and Nasdaq Composite added 0.3% and 0.1%, respectively.
Despite the overall gains, big tech stocks showed mixed performance, with Nvidia and Meta Platforms falling over 1% each, while Palantir Technologies and Tesla posted gains of 2.9% and 1.8%, respectively.
The Bureau of Labor Statistics reported a 0.2% increase in December’s PPI, which measures wholesale inflation, significantly below the 0.4% forecast by economists polled by Dow Jones.
Core PPI, which excludes volatile food and energy prices, remained flat.
These figures provided a glimmer of hope for traders hoping the Federal Reserve is nearing its inflation-control targets.
Market participants are now keenly awaiting Wednesday’s consumer price index (CPI) report, a key inflation gauge.
Analysts expect headline CPI to rise 0.3% in December.
“If CPI comes in hotter than expected, it would certainly be bad news for equity markets because it would imply that the Fed will indeed remain slower to lower interest rates,” warned Sam Stovall, chief investment strategist at CFRA Research.
Fed futures trading indicates near-certainty that the Federal Reserve will keep rates steady at its upcoming meeting.
Current market pricing suggests a 77.9% probability that the central bank will maintain its target range of 4.25%-4.5% through March, according to the CME FedWatch tool.
Big banks to kick off earnings season
Investors are also bracing for the fourth-quarter earnings season, which begins with major banks this week.
Industry heavyweights including JPMorgan Chase, Citigroup, Goldman Sachs, and Wells Fargo are set to report results on Wednesday, with Morgan Stanley and Bank of America following on Thursday.
Sector performance: utilities surge, healthcare stumbles
Utilities led the market gains on Tuesday, with the sector advancing 1.4%. Vistra was a standout performer, surging over 5%, while Constellation Energy climbed 4%.
Other notable gainers included NRG Energy (up 3%) and AES Corp (up 2%). Industrial, materials and financial sectors also recorded gains of at least 1.2%.
On the downside, healthcare stocks dragged the S&P 500 lower, with the sector falling 1.6%.
Eli Lilly posted the steepest decline, dropping over 7%, followed by Charles River Laboratories (down nearly 6%) and Biogen (down at least 3%).
The communications services sector also slumped, declining 1.2%, led by a 3% drop in Meta Platforms.
Nike hits three-year low
Nike shares slid 1.7% on Tuesday, marking their lowest level since March 2020.
The stock has fallen 14% since Elliott Hill took over as CEO in October.
As Wall Street braces for inflation data and a flurry of earnings reports, investors remain cautious but optimistic about market recovery, with tech and banking sectors in focus.
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