S&P 500 Cuts Gains as Tech Bid Fades Despite Easing Rates

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By Yasin Ebrahim

Investing.com -- The S&P 500 cut gains Tuesday, as the intraday run-up in tech faded even as Treasury yields slipped following data suggesting the pace of red-hot inflation could be nearing a peak.

The S&P 500 rose 0.1%, the Dow Jones Industrial Average gained 0.64%, or 225 points, the Nasdaq slipped 0.89%.

The consumer price index, or CPI, climbed to 8.5% in the 12 months through March, above economists’ forecasts of 8.4%, but it was the core CPI, which excludes food and energy, that dominated attention.

The core CPI rose 0.3% in March, missing economists’ forecast for a rise of 0.5%, led by a “larger-than-expected decline in core goods prices alongside a surprising miss in rents,” Morgan Stanley said in a note.

Some on Wall Street aren’t getting carried away, warning that there is still a long way to go for inflation to return to the Federal Reserve’s 2% target.

“[W]hile today's report is encouraging, the Fed is a long way away from claiming victory and will have to remain in inflation-fighting mode,” Jefferies said in a note.

U.S. Treasury yields took a breather following the data, briefly helping growth sectors of the market including tech catch a bid.

Energy stocks were the biggest gainer in the wake of surging oil prices as global demand worries eased after Shanghai curbed some of its Covid-19 restrictions.

Marathon Oil (NYSE:MRO), Devon Energy (NYSE:DVN), Diamondback Energy (NASDAQ:FANG) led the gains in the energy sector.  

Consumer discretionary stocks were helped by rising restaurant stocks after Citi highlighted Chipotle Mexican Grill (NYSE:CMG), Darden Restaurants (NYSE:DRI), and Texas Roadhouse (NASDAQ:TXRH) as opportunities with the most upside that can ride out the waning reopening boost and the impact of labor shortages.

CarMax (NYSE:KMX) fell 8% after reporting mixed quarterly results as earnings fell short estimates on declining sales volumes.

Bank stocks struggled a day ahead of JPMorgan (NYSE:JPM) quarterly results as falling Treasury yields soured investor sentiment.

In other news, PG&E (NYSE:PCG) rose 3% after it agreed to pay a $55 million settlement over two fires in Northern California.