Stock market today: US stocks go nowhere ahead of CPI data

US stocks wobbled to end a largely uneventful trading session as investors await a critical inflation report, due early Wednesday morning.

The Dow Jones Industrial Average (^DJI) hugged the flatline while the tech-heavy Nasdaq Composite (^IXIC) edged up about 0.3%. The benchmark S&P 500 (^GSPC) climbed more than 0.1%.

The benchmark 10-year Treasury yield slipped about 6 basis points on Tuesday to trade around 4.4%.

Atlanta Fed president Raphael Bostic spoke to Yahoo Finance's Jennifer Schonberger on Tuesday — just ahead of critical CPI inflation data.

The central bank leader said a CPI print that comes in line with consensus estimates would be a "welcome development" in the Fed's fight toward 2% inflation. Still, he expects "some bumpiness," noting he sees inflation decelerating "at a very slow rate" throughout the course of the year.

The inflation report, set for release at 8:30 a.m. ET, is expected to show headline inflation of 3.4%, an acceleration from February's 3.2% annual gain in prices, according to estimates from Bloomberg. Higher energy costs, fueled by a jump in gas prices, are expected to have driven the increase.

On a "core" basis, which strips out the more volatile costs of food and gas, prices in March are expected to have risen 3.7% over last year — a modest slowdown from the 3.8% annual increase seen in February, according to Bloomberg data.

Bostic, who only expects one rate cut in the fourth quarter, said it's possible the Fed may need to delay cuts "even further out" given the strength of the US economy. Still, if the disinflation pace resumes, the central bank could pull its cuts forward.

"Ultimately it will depend on what the data shows," he said.

In terms of growth, Bostic said the "US economy has been incredibly resilient." Just last week, a strong labor report showed the US economy added more jobs than expected in March as the unemployment rate decreased while wage growth held steady.

"I'm actually very grateful the economy is producing a lot of jobs, that output is up, that wages are up. These are all good things," he said. "My outlook is still that the economy will slow but not nearly as much as I had anticipated in January."

A rapid decline in core goods prices, which exclude food and energy, helped bring inflation significantly closer to the Fed's 2% target.

But after January's Consumer Price Index (CPI) report, investors and economists alike were reminded that the rest of inflation's decline might not come as smoothly.

As seen in the first chart below, core goods increases have been slowing for the past year, driving inflation lower. Services, however, has had far stickier inflation.

Our second chart drives into what's keeping core services inflation higher. In January, shelter's price decline slowed. Meanwhile, auto insurance, part of the transportation bucket, has also seen a slight uptick over the past few months. Largely, economists don't see the issues in services abating swiftly.

"While we believe core goods prices have some additional room to fall over the next few months as earlier benefits of supply chain normalization feed through to prices, services prices will need to cool more markedly to keep overall inflation on its downward path," Wells Fargo senior economist Sarah House wrote in a note to clients on April 3.

On Wednesday, the Consumer Price Index report is expected to show core prices rose 3.7% year over year, a slowdown from the 3.8% increase seen in February. Monthly core price increases are expected to clock in at 0.3%, slower than the 0.4% increases seen in January and February.

Housing inventory is up this year, igniting hopes that a years-long supply crunch in the market may be easing. But Capital Economics cautions that investors shouldn't read too much into increase.

“We think that reports of a wave of new resale supply coming onto the market are overblown,” Thomas Ryan, property economist at Capital Economics, wrote in a note to clients Tuesday morning. "While the number of homes being listed for sale has increased compared to last year, it is still low by historical standards, as mortgage rate 'lock-in' continues to curb the number of homes put up for sale."

There are two reasons behind his thinking: Comparing this year's inventory levels to last year's is misleading, and most of the attention is focused on the wrong measure of supply, Ryan explains.

Inventory of new homes was historically low last year, suggesting that any uptick this year will appear sizeable in percentage terms, Ryan noted. The number of new listings of homes for sale is still about 20% lower than any point between 2017 and 2021.

Meanwhile, active listings — which represent "the stock of homes on the market" — haven't gained enough steam to indicate a better balance of supply and demand. While the metric has gradually risen since hitting a bottom in 2021, Ryan estimates that the market is still about 400,000 homes off from what can be characterized as a "normal" level of supply on the market.

All this means that with many homeowners locked into mortgage rates below 5%, new resale home supply will be limited this year — again. That should send prices up: Capital Economics is maintaining its forecast that home prices will rise by "an above-consensus 5% this year."

Boeing (BA) shares fell as much as 2.5% on Tuesday following a report from the New York Times that the Federal Aviation Administration is investigating safety claims made by a Boeing whistleblower.

According to the Times, Boeing engineer Sam Salehpour raised concerns over faulty production features of the 787 Dreamliner aircraft. Salehpou had worked at the company for over a decade.

"These claims about the structural integrity of the 787 are inaccurate and do not represent the comprehensive work Boeing has done to ensure the quality and long-term safety of the aircraft," the company said in a statement.

The probe comes after an engine cover fell off of a Southwest jet during takeoff on Sunday — the latest in a string of high-profile incidents for Boeing.

Earlier this year a door panel blew off of a new Alaska Airlines Boeing 737 Max 9.

Bullish investors are looking for a "catch-up" scenario in markets where the earnings for the bottom 490 companies in the S&P 500 start to rebound later in the year.

While that trend won't be the clear driver of earnings growth this quarter, Deutsche Bank chief equity strategist Binky Chadha believes there will be signs of a rotation under the surface in earnings growth, backing the recent market narrative that a growing US economy will be a tailwind for stocks outside the tech sector.

"With a cyclical uptake, with the pickup in CEO confidence that we've seen and talked about, you should start to see much better earnings," Chadha told Yahoo Finance. "You should start to see much better and more confident guidance."

To be clear, Chadha still sees "good earnings" for megacap growth and tech moving forward. But he believes the companies' guidance released this quarter will show some signs of a cooldown from the astronomical earnings growth seen by some large companies in 2023.

If this is met by upbeat guidance from the other areas of the market, it would "continue to encourage" the rotation seen in markets over the past month with sectors like Energy (XLE), Materials (XLB), and Industrials (XLI) outpacing gains in Technology (XLK) and Communications Services (XLC).

Charles Schwab global chief investment strategist Jeffrey Kleintop told Yahoo Finance Live that if first quarter earnings calls indicate a rotation may be underway, that'd be a welcome sign for the health of the stock market rally.

He added that the recent pickup in manufacturing activity, which grew at its fastest pace in the US since 2022, shows analyst expectation for an earnings pickup in economic-sensitive sectors is more than "hope."

"It's a second wind for the stock market," Kleintop said.

Here are the stocks trending on Yahoo Finance in afternoon trading on Tuesday:

Nvidia (NVDA): Shares of the chip giant fell nearly 3% after competitor Intel (INTC) revealed a new version of its artificial intelligence chip at its Vision event on Tuesday. According to the company, the new Gaudi 3 chip can train specific large language models 50% quicker than Nvidia's prior-generation H100 processor. Intel shares climbed about 1%.

Moderna (MRNA): Shares of the pharmaceutical giant jumped to a three-month high, up as much as 10% after the company revealed positive responses in its early-stage cancer vaccine trial. The vaccine, developed with Merck, was used in patients with a type of head and neck cancer.

Alphabet (GOOG, GOOGL): Alphabet shares jumped more than 1% to trade near 52-week highs on Tuesday. The moves come after the tech company announced a new video-creation app, Google Vids, which utilizes artificial intelligence to streamline content development.

Commodities prices are surging as gold (GC=F) hits another record high while the debate intensifies about whether or not oil prices will reach $100 a barrel.

The price of gold has risen over the past eight trading sessions despite recently revised expectations that there may be fewer interest rate cuts than initially anticipated this year.

In a note published on Monday, Bank of America said the price of gold could rally to $3,000 per ounce by 2025. Prices are currently trading above $2,380 an ounce.

Meanwhile, energy prices remain a key risk to inflation after serving as the largest contributor to headline CPI numbers over the past several months.

WTI crude oil (CL=F) is currently trading around $86 a barrel while Brent crude prices (BZ=F) have climbed above $90 a barrel.

"Brent has rallied to $91/bbl because the market is now pricing in a firmer demand outlook and some geopolitical downside risks to oil supply, which together have boosted positioning and valuation," Goldman Sachs said in a new research note published on Sunday.

Still, the team does not see prices rising to $100 this year, largely due to solid demand expectations and no additional geopolitical supply hits.

Here is a word we haven't heard tossed around by economists for more than a year: recession.

But it may come back into the market debate at some point this summer, especially if interest rates aren't cut and do in fact stay higher for longer.

I just had a coffee chat with Visa's awesome economist Wayne Best here at Yahoo Finance's NYC headquarters and was really impressed by the work his team is doing on consumers.

He showed me one chart his team recently developed looking at recession risks for this year by state. California was one of those areas at risk (as were many others), in part due to hikes caused by higher hourly wages, Best explained. Elevated interest rates could also be a contributor.

Having said that, don't expect a recession tomorrow. Visa's data is showing a strong propensity to travel and spend on services in coming months. It's just a nuance nobody is talking about in markets right now, hence I wanted to put it on your radar today!

All three major indexes reversed earlier session gains on Tuesday — just ahead of Wednesday's critical CPI report.

The Dow Jones Industrial Average (^DJI) led the move to the downside, falling about 0.7%, or more than 250 points. The benchmark S&P 500 (^GSPC) dropped about 0.6%, while the tech-heavy Nasdaq Composite (^IXIC) slipped roughly 0.3%.

Markets are anticipating just two and a half 25 basis point cuts this year, down from the six cuts expected at the start of the year, according to Bloomberg data.

As investors weigh recent Fed speak and adopt a "higher for longer" interest rate mentality, a key question has emerged: Does the US economy even need rate cuts?

"[The Fed] wants to cut rates, but the economy is standing in its way," Mizuho Securities USA chief economist Steven Ricchiuto told Yahoo Finance Live early Tuesday. "The Fed is fighting the economy. In particular, they’re fighting the American consumers, and that’s a fight that I would not want to get involved in."

Ricchiuto, who does not expect the central bank to cut interest rates this year, added there are certain risks to the upside if interest rates remain unchanged.

"If the Federal Reserve was to cut interest rates without the data justifying it, then you could get into an environment where you begin to embed a 3% inflation psychology into the marketplace as opposed to a 2% inflation psychology," he explained. "That laterally shifts up the fair value trading range of the 10-year note."

The 10-year Treasury (^TNX) yield is currently hovering near five-month highs, with the 5% level seen as the key point of concern.

If Treasury yields rise, "that's a real problem in terms of the outlook for the overall economy because clearly, that will have significant negative effects on the ability of households to purchase homes," Ricchiuto argued.

US stocks climbed higher on Tuesday as investors await key CPI data, due Wednesday morning.

The benchmark S&P 500 (^GSPC) climbed about 0.4%, while the tech-heavy Nasdaq Composite (IXIC) jumped roughly 0.5%. The Dow Jones Industrial Average (^DJI) added about 0.1%, or roughly 50 points.

Meanwhile, fading rate-cut hopes have helped push up the 10-year Treasury (^TNX) yield near five-month highs. The benchmark yield slipped about 3 basis points on Tuesday to trade around 4.4%.

Teens are tightening up their spending, according to Piper Sandler's latest 'Taking Stock' research out this morning.

The spring survey showed that teen “self-reported” spending fell 6% year over year to $2,263, and rose only by 1% from the fall.

The biggest category winner is cosmetics.

Spending on beauty hit the highest level since spring 2018, interesting in the sense that Ulta (ULTA) CEO David Kimbell warned last week of an industry slowdown (his stock price was clobbered). E.l.f. Beauty (ELF) gained the most market share relative to its competitors, the survey showed.

Keep an eye on shares of PC makers Dell (DELL) and HP Inc. (HP) today.

PC industry firm Canalys said Tuesday that total shipments of desktops and notebooks grew 3.2% annually to 57.2 million units in the first quarter. The research outfit says this is a sign of demand building ahead of catalysts coming later this year, such as the arrival of AI PCs and the Windows 11 refresh.

“Growth in the first quarter of 2024 bodes well for a strong PC market throughout the year,” said Ishan Dutt, principal analyst at Canalys. “Vendors and the channel have been working through some final stages of inventory corrections, and macroeconomic conditions in certain markets continue to limit demand. But the strength of the refresh opportunity, particularly from businesses, is beginning to come to the fore. The market is set to go from strength to strength in the coming quarters as customers prioritize upgrades in preparation for a large-scale transition to Windows 11."