U.S. stocks fell into a holding pattern on Tuesday as investors tried to gauge the time until a key inflation report is released and the fate of interest rates becomes clear.
Futures tracking the Dow Jones Industrial Average (^DJI), S&P 500 (^GSPC), and tech-heavy Nasdaq 100 (^NDX) were all trading just above the flatline.
Stocks were left out ahead of Wednesday’s release of the consumer price index, seen as a crucial point for markets whose next rally is set to slow after a strong first quarter.
Investors are becoming increasingly less confident that the Fed will deliver its expected three interest rate cuts this year, given continued signs of strength in the U.S. economy. This has put increased focus on March’s CPI data, with signs that inflation is starting to calm down again being seen as an invitation for a policy change in June.
Meanwhile, the 10-year US Treasury (^TNX) yield has risen to near a five-month high as expectations for interest rate cuts fade. This is also a potential headwind for the stock, with the 5% level seen as a major concern. The benchmark yield fell to about 4.4% on Tuesday.
At the same time, rising metal prices have raised concerns about feedthrough effects on inflation. Copper (HG=F), a key industrial input, rose about 0.4% early Tuesday, adding to its year-to-date gain of 10%, sparking talk of a new bull market. Gold (GC=F) rose 1.1% to $2,365.35 an ounce, extending its gains to a new record.
Another trigger is the start of the first quarter earnings season, which begins in earnest on Friday with earnings announcements from companies such as Citigroup (C), JP Morgan (JPM), and Wells Fargo (WFC).
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Teens are cutting back on spending, but not everywhere
Piper Sandler’s latest “inventory” study, released this morning, shows that teenagers are tightening their spending.
According to the spring survey, “self-reported” spending among teens fell 6% from a year earlier to $2,263, and was only up 1% from the fall.
The biggest category winner is cosmetics.
Spending on beauty products has reached its highest level since spring 2018, which is interesting in that ULTA CEO David Kimbell last week warned of a slowdown in the industry (his stock plummeted). Research shows that Elf Beauty (ELF) gained the most market share compared to its competitors.
Teenagers control their spending. (Piper Sandler) -
PC recovery continues
Today, pay attention to the stock prices of PC manufacturers Dell (DELL) and HP Inc. (HP).
Total desktop and notebook shipments rose 3.2% annually to 57.2 million units in the first quarter, according to PC industry company Canalys. The research institute says this is a sign of rising demand ahead of catalysts later this year, such as the arrival of AI PCs and a Windows 11 refresh.
“The growth in Q1 2024 is a good sign that the PC market will continue to perform well throughout the year,” said Ishan Dutt, principal analyst at Canalys. “Demand continues to be constrained by macroeconomic conditions in certain markets as vendors and channels engage in the final stages of inventory adjustments. However, we are beginning to see the strength of refresh opportunities, particularly from corporate customers. The market will continue to grow stronger in the coming quarters as consumers prioritize upgrades in preparation for the mass migration to Windows 11.”
PC recovery is continuing. (Canaris)
