Stocks rose modestly on Tuesday after earlier choppy trading, rallying in the afternoon ahead of key inflation figures, which is seen as an indicator on whether the central bank will speed up the number of rate hikes.
Also ahead of the consumer price index data, bond prices added pressure to equities with rising yields, making bonds more attractive to investors. Economists polled by Reuters are expecting the CPI to have risen month over month by 0.3% in January and a core reading of 0.2%.
The Dow advance was up 39 points or +0.15% to 24,640.45 led by Cisco Systems up +1.55% and Walmart up +1.44%. DowDuPont fell -1.52% and United Technologies dropped -1.26%. The S&P 500 rose 9 points or +0.36% to 2,665.76 led rallies in financials and retailers. Leading the winners were Under Armour, Class A shares up +16.87% and Class C shares gained +15.17%. Two sectors made losses, they were materials down -0.14% and energy (-0.37%). Typically defensive sectors real estate rose +0.84% and utilities advanced +0.46% but Retailers Kroger and Gap also made gains up +3.40% and +3.37% respectively.
- Dow 24,640.45 +0.16%
- S&P 500 2,662.94 +0.26%
- NASDAQ 7013.51 +0.45%
- Russell 2000 1,494.62 +0.24%
- NYSE Composite 12,583.92 +0.19%
- Gold 1,324.30 +0.65%
- Oil WTI $59.19 -0.15%
- 10-Year Treasury 2.822 +0.32bp
Meanwhile as equities climbed, the dollar slipped to a just over one-week low with the US dollar index Mar 2018 falling -0.57% to $89.58. But experts expect the greenback to rally as volatility returns. The euro rose against the dollar +0.5% to $1.2358. Oil slipped -0.2% to $59.20 a barrel.
Fed chairman hints interest rate rises remain
At his swearing in the new Federal Reserve chair, Jerome Powell, made a few remarks and among them was a hint that rate hikes remained on the cards for this year.
In his statement, Powell said "The Fed's approach will remain the same. Today, the global economy is recovering strongly for the first time in a decade. We are in the process of gradually normalising both interest rate policy and our balance sheet with a view to extending the recovery and sustaining the pursuit of our objectives."
In December, the bank anticipated three rate hikes for 2018 and confirmed it again at the last Fed meeting at the end of January. The market is expecting the first rate hike in March. A countering of calls by Congressional Republicans for increased oversight also appeared to be in his short statement.
Powell said: "Congress has wisely entrusted us with an important degree of independence so that we can pursue our monetary policy goals without concern for short-term political pressures."