New York Stock Market Rises Within Flat Range... Awaiting March CPI

Rising Government Bond Yields Amid Expectations of Delayed Interest Rate Cut
March CPI and FOMC Minutes to be Released on the 10th

The three major indices of the U.S. New York stock market showed an upward trend in the early trading session on the 8th (local time) while remaining near flat. After rebounding following a stronger-than-expected employment report last month, the market is taking a wait-and-see approach ahead of the release of the March Consumer Price Index (CPI) on the 10th.

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As of 10:24 a.m. at the New York Stock Exchange (NYSE) on the day, the Dow Jones Industrial Average was up 0.09% from the previous close, standing at 38,940.96. The S&P 500, which is centered on large-cap stocks, rose 0.09% to 5,208.8, while the tech-heavy Nasdaq index gained 0.19% to trade at 16,279.67.

The March employment data released by the U.S. Department of Labor on the 5th showed much stronger results than expected. Nonfarm payrolls increased by 303,000 compared to the previous month, significantly exceeding the expert forecast of 214,000. The unemployment rate fell from 3.9% in the previous month to 3.8% in March. The market reacted to the expectation that strong employment could sustain economic growth despite high interest rates.

Bill Adams, Chief Economist at Comerica Bank, analyzed, "Jobs and wages are rising solidly, and total wages are outpacing inflation," adding, "Americans will maintain spending this year, and the economy can move forward."

The market is focusing on the inflation indicators to be released this week. Inflation is the most important economic indicator for the Fed’s interest rate path. On the 10th, the March Consumer Price Index (CPI) will be announced, followed by the March Producer Price Index (PPI) on the 11th. Last month’s CPI is expected to rise 3.4% year-over-year, surpassing the previous month’s increase of 3.2%. The core CPI growth rate is forecasted to decline slightly to 3.7% year-over-year from 3.8% in the previous month.

Adam Crisafulli, founder of Vital Knowledge, said, "The Fed seems unconcerned about strong job growth, but inflation remains a big issue," adding, "The March inflation data must show that the slowdown in price increases is normalizing."

Market attention is also focused on the minutes of the March Federal Open Market Committee (FOMC) meeting to be released on the 10th. While the Fed maintained its projection of three rate cuts this year in last month’s dot plot, the minutes are expected to reveal the Fed officials’ views on the future interest rate path.

Fed officials’ remarks will continue this week. Starting with Minneapolis Federal Reserve Bank President Neel Kashkari’s comments on the day, Fed Board member Michelle Bowman and Chicago Fed President Austan Goolsbee are scheduled to speak on the 10th, followed by New York Fed President John Williams and Atlanta Fed President Raphael Bostic on the 11th.

By individual stocks, Tesla’s shares surged 4.12%. Buying momentum gathered after Tesla CEO Elon Musk announced that the RoboTaxi would be unveiled in early August. U.S. retailers Ulta Beauty and warehouse club BJ’s Wholesale Club were upgraded to “buy” ratings by Wall Street, with their shares rising 2.55% and 0.97%, respectively.

Government bond yields are on the rise. The U.S. 10-year Treasury yield, a global bond yield benchmark, rose 4 basis points (1bp = 0.01 percentage points) from the previous trading day to 4.42%, while the 2-year Treasury yield, sensitive to monetary policy, increased 2 basis points to around 4.76%. Expectations that the timing of rate cuts may be delayed are driving the rise in bond yields.

International oil prices are falling as Israel withdraws a significant number of troops from the Gaza Strip. West Texas Intermediate (WTI) crude oil fell $1.10 (1.27%) to $85.81 per barrel. Brent crude dropped $1.38 (1.51%) to trade at $89.79.