US stocks are falling despite mild inflation, with Powell’s speech expected

Stocks saw little movement on Tuesday with the Dow DJIA,
+ 0.06%
and S&P 500 SPX,
-0.11%
recording small losses to achieve a six-day winning streak for both indices, while Nasdaq Composite COMP,
-0.17%
got a small gain to capture another record close. Russell 2000 RUT with small lid,
-0.11%
it surpassed its brothers with a bigger cap, with a gain of 0.4%, to display another record.

See: Is the stock market to be corrected in 2021? Here’s what some experts think

What drives the market?

Investors remain focused on the outlook for another major round of government spending, as well as on the slow pace of new COVID-19 infections, along with the ongoing launch of the vaccine. At the same time, market observers are analyzing January consumer price inflation data released on Wednesday morning.

The US consumer price index rose 0.3% in January, as expected, after rising 0.4% a month earlier, but excluding volatile food and energy prices, the CPI base was unchanged from an expected increase of 0.1%. CPI inflation has risen by 1.4% in the last 12 months.

Although the main economic indicators do not yet show evidence of inflation, commodity prices are, said Andrew Smith, chief investment strategist at Delos Capital Advisors in Dallas. Raw materials such as CL.1 oil,
+ 0.72%,
WOOD timber,
+ 1.03%,
and C00 maize,
-3.06%
all have gone higher in recent months and could start pinching the pockets of Americans soon, he said.

Even so, Smith told MarketWatch: “We believe we have managed to take a new step in the market.” Although valuations are high in all corners of the market, “we are finally seeing an increase in earnings,” he said.

In a separate report, the Census Bureau said wholesale stocks rose 0.3% in December.

“Investors are already trying to anticipate when the US economy will experience overcoming inflation that is expected to be driven by a higher fiscal stimulus,” Han Tan, a market analyst at FXTM, said in a statement.

“Such conditions could trigger the much-discussed Fed cuts, which could then pave the way for higher interest rates. More clues about this timetable would help global investors set their allowances in stocks versus bonds, ”he said.

Investors were expected to pay little attention to Donald Trump’s second indictment, with arguments set to begin in the Senate on Wednesday afternoon. The Senate voted on Tuesday that the process could continue after a round of arguments over the constitutionality of a former president’s attempt.

The process is not expected to affect financial markets, as it is not seen as interfering with a push to another round of spending using the coronavirus. President Joe Biden is targeting a $ 1.9 trillion package, and Democrats in Congress have taken steps to promote a spending plan without Republican support in the uniformly divided Senate through a process known as budget reconciliation. The size of the plan is expected to shrink somewhat due to resistance from some Democrats.

Powell is due to submit comments to the New York Economic Club at 2 p.m. East, and federal budget figures for January are set for release at 2 p.m.

See: 24 bank shares with dividends of at least 3.57%, three times more than the 10-year Treasury pays

Which companies are concentrated?

• Actions of Coca-Cola Co.
  KO,
  + 0.06%
  ticked 0.3% higher after earning revenue and earnings on Wednesday morning that exceeded Wall Street expectations.

• Actions of Twitter Inc.
  TWTR,
  + 8.03%
  rose at noon after the social media platform delivered $ 1 billion in the second quarter late Tuesday.

• Cisco Systems Inc.
  CSCO,
  -3.78%
  late Tuesday reported quarterly results that exceeded Wall Street estimates, although sales in some segments fell below expectations. The share of the manufacturer of network services, video conferencing tools and security software decreased by 4.1%.

• Mattel Inc.
  MAT,
  -2.25%
  shares fell 3.4%, even after the toy maker exceeded Wall Street expectations for the fourth quarter and said it continued to be “attentive” to COVID-related volatility and other macroeconomic uncertainties.

• Actions of Yelp Inc.
  YAPPING,
  -6.52%
  It also reversed early gains to fall nearly 7%, despite reporting better-than-expected sales and earnings on Tuesday.

• In the offer news, shares of NIC Inc.
  EGOV,
  + 16.14%
  increased by 16.2% after the digital government solutions and payments company agreed to be acquired by Tyler Technologies Inc.
  BACK,
  + 6.95%
  in a $ 2.3 billion cash transaction.

What are other markets doing?

• Yield on the 10-year treasury note TMUBMUSD10Y,
  1.137%
  slipped about 2 basis points to about 1.140%, after noticing a key threshold at 1.2% earlier. Bond yields and prices are moving in opposite directions.

• US Dollar ICE Index, DXY,
  -0.11%
  a measure of the currency against a basket of six major rivals, fell by 0.1% to about 90.38.

• In the long run, oil rose in turbulent trade, after a report showed lower stocks, with US reference CL.1,
  + 0.72%
  up 0.6% to $ 58.71 a barrel. Gold futures GC00,
  + 0.30%
  were 0.2% higher, close to $ 1,839 an ounce.

• Pan-European Stoxx 600 Europe SXXP Index,
  -0.23%
  lost 0.2% and FTSE 100 UKX in London,
  -0.11%
  decreased by 0.1%.

• In Asia, Shanghai Composite SHCOMP,
  + 1.43%
  closed 1.4% higher while Hong Kong’s Hang Seng HSI Index
  + 1.91%
  increased by 1.9%, and the Japanese Nikkei 225 NIK,
  + 0.19%
  ticked by 0.2%.

Read more: These “sweet sixteen” recovery stocks are still growing, according to Raymond James