Wall Street Gains as Bond Yields Ease; Investors Await Key Inflation Data

In a positive turn for Wall Street, major stock indexes saw upward momentum on Tuesday, bolstered by a retreat in Treasury yields. Investors eagerly await the release of crucial inflation data later in the week, which could significantly impact the Federal Reserve's monetary policy decisions.

All eyes are on the forthcoming March report of the U.S. Consumer Price Index (CPI), scheduled for Wednesday. Analysts anticipate a rise in headline inflation to 3.4% year-on-year, compared to 3.2% in February. The core CPI figure, excluding volatile components such as food and energy, is expected to ease slightly to 3.7% year-on-year, down from 3.8% in February.

Mark Luschini, Chief Investment Strategist at Janney Montgomery Scott, commented, "Given the underlying strength in the economy, it wouldn't be surprising if the CPI comes in slightly higher than expected. However, this doesn't seem to concern investors significantly." He added, "The prevailing sentiment suggests that inflationary pressures will eventually subside, allowing the Federal Reserve room to maneuver with interest rate adjustments."

Amid indications of a robust U.S. economy, investors have moderated their expectations regarding the extent of interest rate cuts by the Federal Reserve this year. Current projections indicate approximately a 60-basis-point reduction, the lowest since October, compared to an earlier anticipation of around 150 bps at the start of 2024, according to data from LSEG.

Traders are currently pricing in a nearly 53% probability of at least a 25 bps rate cut in June, as indicated by the CME's FedWatch Tool, down from 64% last week.

Equities found support as the yield on the 10-year Treasury note eased from its November high in the previous session, currently standing at 4.3837%.

In terms of market performance, all three major indices experienced a flat finish on Monday, with gains limited by an increase in Treasury yields following last week's robust jobs report.

Key minutes from the Federal Reserve's March meeting, where it reiterated its guidance of three rate cuts this year, are anticipated later in the week and could provide valuable insights into the central bank's stance on monetary easing.

Tech behemoth Alphabet saw a 1.4% increase after Google unveiled details of a new version of its data center artificial intelligence chips.

As of 9:36 a.m. ET, the Dow Jones Industrial Average rose 71.49 points, or 0.18%, to 38,964.29, the S&P 500 advanced 15.88 points, or 0.31%, to 5,218.27, and the Nasdaq Composite gained 63.11 points, or 0.39%, to 16,317.07.

All 11 major S&P 500 sectors witnessed gains, with real estate and communication services leading the charge.

Among other notable stocks, Amazon.com, Meta Platforms, and Microsoft saw increases ranging from 0.2% to 0.5%.

Digital Realty Trust surged 1.9% following Wells Fargo's upgrade of the data-center operator to "overweight," projecting potential growth in leasing volumes for 2024.

In contrast, cryptocurrency and blockchain-related stocks faced declines in early trading, tracking the downward trend in bitcoin prices. Companies like Coinbase Global, Marathon Digital, and MicroStrategy saw declines between 0.1% and 4.2%.

Advancing issues outnumbered decliners by a ratio of 4.07-to-1 on the NYSE and 2.39-to-1 on the Nasdaq.

The S&P index recorded 12 new 52-week highs and no new lows, while the Nasdaq saw 32 new highs and 19 new lows.

Also Read: US Futures Rise on Strong Jobs Report Despite Market Volatility