New York Stock Market Mixed as US February CPI Digested... Nvidia and Tesla Down

Mixed Trends in Consolidation Zone After Previous Day's Rise
Investors Await FOMC on 19th-20th

The three major indices of the U.S. New York stock market showed mixed movements around the flat line in early trading on the 13th (local time). Despite the February Consumer Price Index (CPI) slightly exceeding expectations, the market is showing a cautious stance following a broad rally in the previous session.

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As of 9:35 a.m. at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average was up 0.17% from the previous trading day, standing at 39,070.87. The S&P 500, which hit an all-time high the day before and is centered on large-cap stocks, was down 0.06% at 5,171.96, while the tech-heavy Nasdaq index was trading 0.33% lower at 16,212.73.

By individual stocks, Dollar Tree is down 12.5% following disappointing earnings and the announcement of some store closures. Tesla fell 1.8% after Wells Fargo downgraded its investment rating from 'Equal Weight' to 'Underweight.' Nvidia, which surged more than 7% the previous day, is down 1.6%.

The U.S. February CPI inflation rate, released the day before, exceeded expert forecasts for the second consecutive month. According to the U.S. Department of Labor, the February CPI rose 3.2% year-over-year, surpassing the forecast of 3.1%. The increase was also larger than January's 3.1%. The core CPI, which excludes volatile energy and food prices and reflects the underlying inflation trend, rose 3.8% year-over-year, also exceeding the expected 3.7%. Rising housing costs and gasoline prices pushed the CPI higher.

The market was relieved that the CPI increase was not significantly beyond expectations, rather than the fact that the inflation rate expanded. It was seen as not enough to change the outlook for a rate cut in June. Futures markets are pricing in nearly a 70% chance that the Fed will start cutting rates in June and reduce them by 0.25 percentage points three times over the year.

Following the CPI, the Producer Price Index (PPI) will be released on the 14th. February PPI is expected to rise 0.3% month-over-month and 1.1% year-over-year. Retail sales for February, also released on the same day, are forecasted to have increased 0.8% month-over-month, after a 0.8% decline in January.

Now, market attention is turning to the Federal Open Market Committee (FOMC) meeting scheduled for the 19th-20th. Due to stickier-than-expected inflation, the Fed is likely to maintain the stance that it needs further confidence in the sustained slowdown of inflation.

Justin Onuekwusi, Chief Investment Officer (CIO) at asset management firm St. James's Place, said, "Since the fight against inflation is clearly not yet won, it will be difficult for the Fed not to take a hawkish (monetary tightening-favoring) stance at the next meeting." He analyzed that the February CPI report "warns that inflation risks remain high and are having a significant impact across portfolios." He also cautioned, "The market is still aggressively pricing in rate cuts in June, which may underestimate the impact of sticky inflation."

U.S. Treasury yields are rising. The benchmark 10-year U.S. Treasury yield increased by 3 basis points (1bp = 0.01 percentage points) from the previous trading day to 4.18%, while the 2-year Treasury yield rose 1 basis point to around 4.61%.

International oil prices are firm following news that Ukraine launched drone attacks on several oil facilities on Russian mainland. West Texas Intermediate (WTI) crude rose $1.15 (1.5%) to $78.71 per barrel, and Brent crude increased $1.06 (1.3%) to $82.98 per barrel.