[New York Stock Market] Mixed Close Amid Wait-and-See After CPI Release... International Oil Prices Up 3%

NVIDIA Drops by 1%, Tesla Falls by 4%
Focus on FOMC on 19th-20th

The three major indices of the U.S. New York stock market closed mixed on the 13th (local time). The market is showing a cautious stance as it digests the February Consumer Price Index (CPI) released the previous day. Investors' attention is focused on the Federal Open Market Committee (FOMC) meeting scheduled for the 19th-20th.

On that day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average, centered on blue-chip stocks, closed at 39,043.32, up 37.83 points (0.1%) from the previous trading day. The S&P 500, focused on large-cap stocks, fell 9.96 points (0.19%) to 5,165.31, and the Nasdaq index closed down 87.87 points (0.54%) at 16,177.77.

Among individual stocks, the decline in tech stocks was notable. Nvidia fell 1.12%. Meta, the parent company of Facebook, and Apple dropped 0.84% and 1.21%, respectively. Tesla, downgraded by Wells Fargo from 'equal weight' to 'underweight,' fell 4.54%. Additionally, Dollar Tree plunged 14.2% after disappointing earnings and the announcement of some store closures.

Tom Essaye, founder of Sevens Report, commented on tech stocks, saying, "The fundamentals are positive, but the current valuations still cannot be justified," adding, "This makes the market vulnerable to negative surprises."

The market is awaiting the FOMC meeting next week following the release of the U.S. February CPI the previous day. As sticky inflation persists, the Federal Reserve (Fed) is expected to reiterate its stance that additional evidence is needed to confirm that inflation is steadily slowing.

Ayako Yoshioka, senior portfolio manager at Wells Enhancement Group, said, "The headline CPI figure released the previous day provided some relief, but people remain cautious about the core CPI," adding, "It shows that inflation is still stickier than people hope." She further noted, "In the short term, the macroeconomic environment surrounding the Fed will be important."

Justin Onuekwusi, Chief Investment Officer (CIO) at asset management firm St. James's Place, analyzed, "Since the fight against inflation has not yet been clearly won, it will be difficult for the Fed not to take a hawkish (monetary tightening preference) stance at the next meeting."

The U.S. February CPI inflation rate announced the previous day exceeded expert expectations for the second consecutive month. According to the U.S. Department of Labor, the February CPI rose 3.2% year-on-year, surpassing the forecast of 3.1%. The core CPI, which excludes volatile energy and food prices and shows the underlying trend of inflation, rose 3.8% year-on-year, also exceeding the expected 3.7%. Rising housing costs and gasoline prices pushed the CPI higher.

However, the market did not view the increase as sufficient to change expectations for a rate cut in June. The futures market reflects nearly a 70% chance that the Fed will begin cutting rates in June, with a total of three cuts of 0.25 percentage points each over the year.

Investors' attention is focused on the Producer Price Index (PPI) and retail sales data to be released on the 14th. The February PPI is expected to rise 0.3% month-on-month and 1.1% year-on-year. Retail sales for February, also released on the same day, are expected to have increased by 0.8% month-on-month. The market is likely to use these last indicators before the FOMC next week to gauge the Fed's future interest rate path.

Government bond yields are rising. The U.S. 10-year Treasury yield, a global bond yield benchmark, rose 3 basis points (1bp = 0.01 percentage points) from the previous trading day to 4.19%, while the 2-year U.S. Treasury yield increased 3 basis points to 4.63%.

International oil prices surged nearly 3%, reaching the highest level in four months. West Texas Intermediate (WTI) crude rose $2.16 (2.8%) to $79.72 per barrel, and Brent crude increased $2.11 (2.6%) to $84.03 per barrel. The decline in U.S. crude inventories and news that Ukraine launched drone attacks on several Russian mainland oil facilities pushed oil prices higher.