The S&P 500 ended Tuesday's session flat as investors prepared for the release of key inflation data later this week.
The broader index was little changed at 4,108.94, inching down by 0.004%. The Dow Jones Industrial Average rose 98.27 points, or 0.29% to 33,684.79. Meanwhile, the Nasdaq Composite shed 0.43% to 12,031.88.
Cyclical stocks outperformed, even as tech names lagged. Energy names led the S&P 500, with the sector up about 0.9%. On the other hand, tech stocks lagged the broader index, with the information technology sector falling by 1%.
Those moves come ahead of the March readings of the consumer price index, due Wednesday, and the producer price index, out Thursday. Both inflation metrics could give further clarity into how the Federal Reserve might proceed on its rate-hiking campaign.
"The data coming forward this week is important in that it will be one of the last sets of data to inform the May 3rd Federal Reserve meeting. And, as the Federal Reserve evaluates their battle against inflation and the appropriate pace of monetary policy, market conditions have already begun to lean back towards an additional rate increase at the next meeting," U.S. Bank Wealth Management's William Northey said.
"This set of data will certainly provide context for the Federal Reserve to evaluate where they are in that battle," Northey added.
Further, Wall Street is heading toward another season of earnings announcements, with several major U.S. banks scheduled to release their earnings reports for the first time since the series of bank crises in March. JPMorgan Chase, Wells Fargo and Citigroup are set to report Friday. BlackRock and UnitedHealth Group are also scheduled to report.
Capital Group expands ETF expansion
Los Angeles-based asset manager Capital Group filed for three new ETFs on Tuesday, including two funds focused on international stocks.
Capital Group entered the ETF space last year and found quick success. Its nine existing funds have about $8 billion under management combined.
All three of the new funds are actively managed.
"I think actively managed ETFs are going to continue to find a home in investor portfolios, particularly where investors in the past wanted an ETF but had to use an index-based product. Now they no longer have to make that choice," said Scott Davis, director of ETFs at Capital Group.
— Jesse Pound
Labor market is still too tight, BCA Research says
Despite signs of softening, the labor market is "still too tight," strategists at BCA Research said.
"On the one hand, easing employment conditions reflect the impact of the Fed's rate hikes, indicating that policy is restrictive," they said. "Yet on the other hand the tight labor market implies that a recession is not imminent."
"Despite the slowdown in the pace of nonfarm payroll employment, the March figure remains more than double the 100 thousand jobs per month that Fed Chair [Jerome] Powell cited in a November speech as the pace needed to accommodate population growth over time," they added.
— Fred Imbert
Chicago Fed president is keeping eye on credit conditions
Chicago Fed President Austan Goolsbee said Tuesday he's keeping an eye on credit conditions ahead of the central bank's May meeting.
"Foremost thing on my mind before our next meeting in May is trying to get a handle on this question about credit: is it actually credit tightening?" he said at the Economic Club of Chicago. Concerns over credit conditions heightened after the collapse of Silicon Valley Bank and Signature Bank.
— Fred Imbert
New York Fed's Williams says central bank will stay data dependent
"We have to be driven by the data," New York Fed President John Williams told Yahoo Finance on Tuesday. "I will say that one thing that we're paying attention to is credit conditions but also do we really see signs of this underlying inflation coming down?"
Williams' comments come a day ahead of the release of the latest U.S. inflation figures. Economists polled by Dow Jones expect a 6% year-over-year increase in the consumer price index. Currently, the Fed is expected to raise rates by 25 basis points next month.
— Fred Imbert
Tech losses leave broader market 'barely clinging' onto gains, Susquehanna says
Tech heavyweights are dragging the broader market down on Monday.
"SPX is barely clinging on to gains today despite ~80% of components in the green because mega cap Tech is not participating," says a recent note from Susquehanna International Group.
Technology was the only sector in the red in the S&P 500 during early afternoon trading.
Shares of Microsoft and Amazon were down more than 2%, while Apple and Google-parent Alphabet edged lower 0.2% and 0.5%, respectively. Nvidia, one of the market's best-performing stocks so far this year, lost about 0.7%. The Technology Select Sector SPDR Fund dropped 0.6%.
The broader index would be up over 40 basis points instead of 10 basis points without Monday's losses from these large-cap tech names, according to the firm. The S&P 500 was recently up 0.27%, putting it on pace for a third straight day of gains.
— Pia Singh
Today’s market is set up for cyclicals, says Vice Chairman of Ariel Investments
Charles Bobrinskoy, Vice Chairman of Ariel Investments, is bullish on cyclical stocks for the near term.
"The market is not cheap, but cyclicals and consumer discretionary and certain financial industry stocks are very attractive," Bobrinskoy said on "The Exchange." "My prediction is, as we get on the other side of these recessionary fears, interest rates–long-term rates–will actually go up a bit, above 4% on the 10-year. And that will not be good for tech stocks."
Cyclical names, such as oil and gas companies, are trading at values in a market that is pricing in for a recession, Bobrinskoy said. His top picks are Goldman Sachs, automotive supplier Borgwarner, flooring manufacturer Mohawk Industries and energy supplier Apache—which are all trading higher on Monday. Mohawk is leading the broader market on Monday, with its shares up 5.3% in afternoon trading.
"Those are names that are trading for less than 10 times earnings because people are worried about a recession, and if we don't get one, they're going to do very, very well," Bobrinskoy said.
– Pia Singh
Roundhill launches 'Big Tech' ETF
ETF firm Roundhill launched the hyper-concentrated BIG Tech ETF on Tuesday, as it continues to build out a lineup of sector funds that give investors exposure to only the biggest, most well-known stocks.
The fund has exposure to just five companies: Amazon, Meta Platforms, Microsoft, Apple and Google-parent Alphabet. The fund uses equities and swaps to gain this exposure.
The new fund has a ticker of BIGT and an expense ratio of 0.29%.
The Big Tech ETF comes on the heels of a concentrated large bank ETF that Roundhill launched last month. The firm has filed to launch similar funds focused on airlines and defense stocks.
— Jesse Pound
Warren Buffett sold Taiwan Semi partly due to geopolitical tensions, Nikkei reports
The "Oracle of Omaha" sold 86% of his stake in the chipmaker in the fourth quarter. He had just bought the stock in the third quarter and made it Berkshire's 10th biggest holding.
Buffett said geopolitical tensions were "a consideration" in the divestment, the paper said. He called the Taiwanese chip company a well-managed one but said Berkshire had better places to deploy its capital.
— Yun Li
Airline stocks rise on jump in Boeing deliveries
Airline stocks rose Tuesday after Boeing shared a rise in deliveries in March as customers look to meet increasing travel demand.
Boeing delivered 64 planes last month, versus 28 in February, bringing its total deliveries for the first quarter to 130. That also put the aircraft maker three planes ahead of its competitor Airbus for the period.
— Samantha Subin
Consumers are pulling back sharply on goods spending, Barclays says
Consumers are pulling back sharply on goods spending in what could be a troubling signal for the U.S. economy, according to Barclays.
For the first time since 2021, aggregate spending growth on a year-on-year basis in the Barclays U.S. credit card spending database fell below zero, analyst Renate Marold wrote to clients in a Tuesday note. It's been on the decline since the start of this year.
The biggest contraction in credit card spending comes from goods spending. While consumers across all income levels are lowering their spending, the sharpest pullback comes from higher income shoppers.
"[Goods] spending by high-end consumers is falling fastest, with current goods spending nearly 10% below last year's level," Marold wrote. "This may suggest that the higher-income consumers are feeling the pinch in their wallets from inflation and are in the position where reduced discretionary spending on goods is possible."
What's more, the decrease is not due to a smaller set of credit card users as the data had been corrected for any changes, read the note.
"Instead, it could be a more ominous sign for the US economy," Marold wrote.
— Sarah Min
BTIG's Krinsky sees 'very poor' risk reward ahead
Investors should proceed with caution when getting into the market this week, according to BTIG's Jonathan Krinsky.
"While today's volumes are likely to remain light ahead of heavy data and EPS the rest of the week, we continue to see very poor risk/reward broadly here," the chief market technician wrote in a note to clients Tuesday. "Daily stochastics for SPX are as overbought as they have been in the last year."
He noted that both Thursday and Monday marked some of the lightest volume days of 2023. Both started out with weak breadth and saw the SPDR S&P 500 ETF Trust trading 20% below average.
The SPDR S&P Regional Banking ETF's inability to rally, could be another sign of a possible leg lower ahead, Krinsky said. He noted that the KRE hasn't been able to test its 20-day moving average since breaking below it to the downside in February.
"There is the possibility we get a short-term 'buy the news' relief rally as their EPS comes in, but when something gets extremely oversold and can't bounce, there's usually another leg lower on the horizon," he wrote.
— Samantha Subin
Jefferies gets bullish on NYCB after the bank scoops up Signature
NYCB, through its Flagstar arm, purchased billions in assets and deposits from the failed Signature Bank last month, and its shares have rallied since then.
However, Jefferies analyst Casey Haire wrote that the bank is still undervalued and that the deal improved NYCB's balance sheet. In fact, the move brings NYCB's loan-to-deposit ratio below 100% for the first time in over 20 years, according to Jefferies.
— Jesse Pound
Materials stocks outperform
Information technology stocks lag
Information technology stocks lagged on Tuesday, with the S&P 500 sector last down 0.6%.
Microsoft and Salesforce led the sector's declines, falling 2% and 1.1%, respectively. Chip and software stocks also lost moved lower, with Advanced Micro Devices and Ceridian last down about 1% each.
— Samantha Subin
Brazil ETF is up 4% in its best day since October 2022
Stocks open little changed
The major averages were little changed, with the S&P 500 and Dow advanced slightly, while the Nasdaq pulled back marginally.
— Fred Imbert
IMF says global economy heading for weakest growth since 1990
The International Monetary Fund on Tuesday released its weakest global growth expectations for the medium term in more than 30 years.
The D.C.-based institution said that five years from now, global growth is expected to be around 3% — the lowest medium-term forecast in an IMF World Economic Outlook since 1990.
"The world economy is not currently expected to return over the medium term to the rates of growth that prevailed before the pandemic," the Fund said in its latest World Economic Outlook.
— Silvia Amaro
WeightWatchers’ parent rockets higher by 25% after Goldman says the stock will more than triple
WW International, the parent WeightWatchers, saw its shares skyrocket 25% in premarket trading Tuesday. Goldman Sachs upgraded the stock to buy from neutral as it's bullish on the diet company's new foray into obesity medications. The firm also raised its 12-month price target to $13, more than tripling from Monday's close of $4.12.
WW acquired Sequence, a telehealth platform that provides its subscribers with access to GLP-1 medications such as Wegovy and Ozempic.
"We believe a catalyst for a turnaround has emerged with its new obesity drug on-ramp solution," Goldman said. "With this new service offering we expect a cohort of consumers to turn to it for help navigating what is poised to be an increasingly complex field of pharmaceutical solutions."
— Yun Li
Stocks making the biggest moves premarket
Check out the companies making headlines before the bell on Tuesday:
- CarMax — Shares of the vehicle retailer soared 6.3% on the back of better-than-expected quarterly earnings. CarMax earned 44 cents per share, beating a Refinitiv forecast of 24 cents per share.
- Moderna — The biotech giant slid 4.6% after the company said it's delaying its flu vaccine due to a lack of enrolled cases in a late-stage trial. The news comes after a company spokesperson told CNBC on Monday that Moderna hopes to release a slew of new vaccines that target cancer, heart disease as well as other yet-to-be confirmed conditions by 2030.
- WW International — Shares popped more than 28% after Goldman Sachs said the weight loss company could triple in value. "WW's subscriber base and earnings power has been shrinking, but we believe a catalyst for a turnaround has emerged with its new obesity drug on-ramp solution," Goldman said.
Read here to see which other companies are making moves before the open.
— Pia Singh
Upstart slides 3% following JPMorgan downgrade
Upstart, an artificial intelligence-powered loan platform, lost 2.7% in premarket trading after JPMorgan said the stock could struggle going forward.
Analyst Reginald Smith initiated coverage of the lending stock at underweight. His $11 price target implies the stock could tumble 36% over the next year from Monday's close.
"We like the potential of UPST's AI lending platform, but our long-term bullishness is offset by near-term headwinds including slowing originations, waning investor demand for sub-prime unsecured consumer credit, and elevated losses on held loans," he said in a note to clients Tuesday.
He also said the stock's year-to-date rally of nearly 30% is shocking. CNBC Pro subscribers can read the full story here.