Wall Street is poised to open in the red on Tuesday as stock futures declined ahead of the all-important consumer price inflation report for January. Overbought levels could be on traders’ minds, especially as the market moves past the crucial phase of the reporting season. The major drivers in the near term could be pointers toward the Federal Reserve’s rate trajectory, particularly as the market heads toward a historically soft March.
Fund manager Louis Navellier said he expects benign inflation numbers this week. He highlighted shelter costs, also known as owner-equivalent rent, as the key component to watch, given its recent reacceleration. “However, the high-end rental market is showing some signs of excess capacity, which may help moderate rental costs.”
Cues From Monday’s Trading:
U.S. stocks closed mixed on Monday as overbought levels stirred indecision among traders. They apparently chose to take some profits off the table ahead of the inflation report. On Friday, the S&P 500 closed above the 5,000 level for the first time ever. Comments by Federal Reserve officials did not help matters further. Richmond Fed President Thomas Barkin said at an event in Atlanta that it is too early to declare victory over inflation.
The major indices opened mixed and showed indecision in early trading before launching into a rally. The upward momentum stalled in the mid-session, with the indices either trimming or giving back their gains before closing mixed. On a positive note, the Dow re-entered record territory and small-caps saw notable buying.
Among the S&P sector classes, energy and utility stocks advanced strongly, while IT stocks came under selling pressure.
US Index Performance On Monday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -0.30% | 15,942.55 |
| S&P 500 Index | -0.09% | 5,021.84 |
| Dow Industrials | +0.33% | 38,797.38 |
| Russell 2000 | +1.75% | 2,045.26 |
Analyst Color:
The week could pan out well for the market, according to Yardeni Research. “On balance, it should be a good week for stocks and bonds as the inflation indicators — including January’s PPI (Fri) and February’s inflation expectations (Mon) — confirm that inflation continues to moderate, while the economy is growing albeit more slowly,” the firm said in its…
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