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Wall Street Mixed As Investors Await US CPI Figures; Nasdaq 100 Loses 0.4%, Dow Gains 0.1%

Alice Wang

Aug 09, 2022 14:57

Investors are concentrating on the upcoming CPI report as Wall Street is mixed.

On Monday, Wall Street experienced mixed results, with stocks generally retreating from recent multi-month highs set in the session's opening minutes. Before falling back to around 4,150, the S&P 500 briefly surged as high as the 4,180s to reach its early June highs in the 4,170s. The Dow Jones Industrial Average managed to settle roughly 0.1 percent higher just over 32,800 after momentarily breaking the 33,000 milestone for the first time since 8 June, while the Nasdaq 100 almost reached 13,400 before pulling back to close closer to 13,150.

Investors were in a relatively upbeat mood on Monday because they were less concerned about the Fed tightening monetary policy more quickly to control inflation in a US economy that appeared to still be going strong than they were about the positive signals sent by last week's strong US ISM PMI survey and jobs data about the US economy.

At subsequent meetings, the Fed should continue to contemplate 75 basis point rate rises, according to Fed policymaker Michelle Bowman. Other Fed officials have lately reiterated the bank's commitment to combating multi-decade high inflation, which analysts have seen as pushback against markets that moved to reduce Fed tightening expectations in late July.

When the US Consumer Price Index is released on Wednesday, the market's upbeat assessment of the situation will be put to the test. While the MoM and YoY headline inflation rates are predicted to moderate to 0.2 percent and 8.7 percent, respectively, the YoY rate of core inflation is predicted to increase to 6.1 percent. Investors will keenly monitor how the CPI data affects this pricing since markets are now pricing in a probability of around 70% that the Fed will increase interest rates by 75 basis points in September.

Data from the University of Michigan Consumer Sentiment survey will also be keenly examined, particularly the sub-component on inflation expectations given that inflation is still a major market concern. Consumer inflation expectations that continue to fall could allay Fed worries about ingrained high inflation.

Chipmakers Energy Sector Performs Despite Nvidia's Revenue Warning as Oil Recovery Continues.

After Nvidia issued a sales warning, chipmaking stocks fell. Nvidia informed investors that it anticipates second-quarter revenue to decline by 19% from first-quarter levels due to a slump in the gaming industry. Although it finished the US session 1.6 percent down, the closely watched Philadelphia Semiconductor Index was able to maintain its position above the 3,000 mark.

After the US Senate approved the Inflation Reduction act, which includes a provision to cut medication costs, by a vote of 51 to 50, healthcare names were split but in the spotlight. Additionally, the law provides additional subsidies for the development of electric cars and a new $4,000 tax credit to promote the purchase of old ones, boosting the growth of automakers like Ford and Tesla.

The biggest electric vehicle manufacturer in the world, according to a CNBC report, secured deals with Indonesian nickel processors for around $5 billion, which gave Tesla shares a lift. A crucial battery component is nickel. Following that, the majority of these gains were lost as trading remained choppy for Tesla shares.

Information Technology had the poorest performance among the S&P 500 GICS sectors, losing 0.9 percent. Energy, on the other hand, was the best-performing sector, rising by around 0.5 percent as WTI prices rose by $2.0 from multi-month lows reached last Friday in the $87.00 region to over the $90 mark.