Stocks climb after inflation report, shake off news of Tillerson departure – MarketWatch

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U.S. stock indexes rallied on Tuesday as investors welcomed benign inflation data and digested news that President Trump nominated Central Intelligence Agency Director Mike Pompeo to replace Secretary of State Rex Tillerson.

Meanwhile, closely watched consumer-inflation data was in line with expectations, helping to placate worries rising prices would hasten interest-rate hikes by the Federal Reserve.

What are the main benchmarks doing?

The S&P 500 index SPX, +0.09% was up 17 points, or 0.6%, to 2,799 with all 11 main sectors trading higher, led by the materials and health-care sectors.

The Dow Jones Industrial Average DJIA, +0.20% gained 181 points, or 0.7% to 25,360, supported by a rise in shares of component Caterpillar Inc. CAT, +0.63% up 2%.

The Nasdaq Composite Index COMP, -0.23% was up 33 points, or 0.4%, to 7,621, trading in record territory. The index hit a fresh all-time intraday high at 7,637.27.

Opinion: Here’s the No. 1 tech stock, according to money flows

What is driving markets?

The consumer-price index rose a mild 0.2% in February after a worrisome 0.5% increase in the first month of the year. The cost of housing rose and the price of clothes and auto insurance posted surprisingly large gains for the second month in a row.

Economists surveyed by MarketWatch had forecast a 0.2% advance.

The increase in the CPI over the past 12 months edged up to 2.2% from 2.1%.

A stronger-than-expected inflation number was feared as a potential catalyst to nudge the central bank closer to four hikes instead of the three that the Federal Reserve is expected to carry out, something that could weigh on stocks. The Fed is expected to increase interest rates in March, but the jury out on how aggressively it will act beyond that.

Markets mostly shook off reports that Trump ousted Secretary of State Rex Tillerson, coming amid a number of recent moves in the Trump administration.

Read: What to watch in the CPI report

And: The overheating economy could crash in 2019, this top forecaster says

What are strategists saying?

“Investors got used to the game of musical chairs in the White House and realize that it’s not a true economic risk,” said Karyn Cavanaugh, senior market strategist at Voya Financial.

“CPI really was on the money, showing inflation is not too hot and not too cold. Combined with the fact that there is still slack in the labor market we don’t worry too much about inflation,” Cavanaugh said.

Which stocks are active?

Shares of Qualcomm Inc. QCOM, -4.49%  fell 5% in thin, premarket trade after Trump on Monday blocked Broadcom Ltd’s AVGO, +1.50%  $117 billion hostile bid for the semiconductor group, citing national security concerns.

Read: How Broadcom vs. Qualcomm went from hostile takeover bid to a Trump blockage

Plus: Semiconductor stocks are hitting new highs again, yet they’re still cheap

DSW Inc. DSW, +10.31% shares fell around 5% in premarket after the footwear retailer posted quarterly results.

Stitch Fix Inc. SFIX, -1.44%  could be active after the online clothing retailer beat Wall Street’s forecasts for sales, but missed on revenue. In addition, nearly 38 million new shares of the company became eligible for trading after Monday’s close.

Shares of Dick’s Sporting Goods Inc. DKS, -5.19%  sank 6.3% in premarket trade Tuesday, after the sporting goods retailer beat fiscal fourth-quarter profit expectations, but missed on sales and provided a downbeat outlook.

Micron Technology Inc. MU, +1.01%  is up 3.6% after Mizuho raised its price target to $66, the third firm to raise its target this week.

What are other markets doing?

European stocks SXXP, -0.35% were mixed, while Asian markets had also a mixed day.

The ICE U.S. Dollar Index DXY, -0.18% edged lower after the inflation report, while gold prices GCJ8, +0.20% tipped slightly higher, and oil prices CLJ8, -1.66%  were slumping.

The yield on the 10-year U.S. Treasury TMUBMUSD10Y, -0.21% retreated to 2.845% from 2.867% before the report.