US stocks fell slightly from Monday’s record highs as subdued trading resumed ahead of the first quarter earnings season and the release of widely watched inflation data.
The Dow Jones Industrial Average slipped 120 points from a closing high in the previous session. Boeing was the biggest drop in the blue-chip Dow, down 2%. The S&P 500 fell 0.1% while the Nasdaq Composite fell 0.4%.
Wall Street was relatively quiet, and the S&P 500 was within 1% for five sessions in a row. Market volatility has returned to pre-pandemic levels amid increasing optimism about the reopening. The Cboe Volatility Index, AKA the VIX or the Market Fear Indicator, has traded below 18 for the past four days, a value not seen since February 2020.
The reopening of the Games resulted in slight losses on Monday as Carnival and Norwegian Cruise Line shares fell more than 4% each. United Airlines fell about 5% after the airline announced that first quarter revenue is expected to decrease 66% year over year. The new forecasts fell near the upper range between 65% and 70% that the company had previously forecast.
Nuance Communications shares rose 18% after Microsoft announced it would buy the $ 16 billion speech recognition company. The Nuance acquisition is Microsoft’s largest acquisition since purchasing LinkedIn for more than $ 26 billion in 2016.
Nvidia jumped 6% after the chip giant announced that first quarter fiscal 2022 revenue was above the previously stated outlook and expects demand to continue to outperform supply for much of this year.
“Amid new highs, it’s not surprising that the market has been on hold lately,” said Chris Larkin. Managing Director for Trading and Investing Products at E-Trade. “All eyes are likely to be on the CPI, which will be read tomorrow for a benchmark where we are on the inflation front. And of course we are ushering in earnings season which could be a catalyst for market movement in the next few weeks.”
The earnings reporting season for the first quarter kicks off this week with expectations for generally positive news and an uptrend for US stocks thanks to a recovering economy. Many of the country’s largest banks, including Goldman Sachs and JPMorgan Chase, will be releasing results for the three months ended March 31 this week.
Tesla was up more than 3% to around $ 700 after Canaccord Genuity upgraded the stock to buy and raised its price target to $ 1,071, citing battery innovations.
This week is also full of Fed speeches and key economic data, including a highly anticipated inflation reading on Tuesday, when the US consumer price index is released. Economists surveyed by Dow Jones expect the CPI to rise by 0.5% on the previous month and by 2.5% on the previous year.
Fed chairman Jerome Powell reiterated Sunday that the Fed would like inflation to rise above 2% for an extended period of time before officials hike rates.
“We want inflation to rise to 2% – and we mean that we don’t just tap the base once on a sustainable basis,” Powell said in an interview broadcast on CBS News in “60 Minutes” on Sunday night. “” “But then we also want it to be on the right track to move moderately above 2% for some time.”
He added that the U.S. economy appears to be at a turning point amid an accelerated rollout of Covid-19 vaccines and strong tax support. “What we are seeing now is really an economy that appears to be at a tipping point,” he said.
Powell will also speak at an Economic Club of Washington event on Wednesday.
Investors will also be keeping an eye on President Joe Biden’s efforts to advance an important infrastructure proposal known as the American Jobs Plan. Biden, who along with fellow Democrats has promised a major infrastructure overhaul in the 2020 election, will meet with a bipartisan group of lawmakers Monday to convince Capitol Hill to support the $ 2 trillion package.
Congress will return to Washington this week and hold its proposal for the first time since Biden’s proposal, which will allocate hundreds of billions of dollars to roads, bridges, airports, broadband, electric vehicles, housing and vocational training.
The president’s plan would also raise the corporate tax rate to 28% and put in place other overseas tax avoidance strategies.
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