Stocks open mixed as focus turns to inflation data

EleonMay 28, 2024

9 3 minutes read

Stocks open mixed as focus turns to inflation data

U.S. stocks opened mixed on Tuesday, with tech a bright spot as Wall Street began a holiday-shortened week focusing on an upcoming inflation report closely watched by the Federal Reserve.

The benchmark S&P 500 (^GSPC) rose about 0.2%, while the tech-heavy Nasdaq Composite (^IXIC) added about 0.4% after strong closing gains Friday . The Dow Jones Industrial Average (^DJI), which lists fewer tech names, slipped 0.3%.

Major indicators are regrouping after a volatile week as traders return from the Memorial Day break. Stocks have been buffeted by two impulses: on the one hand, waning optimism about rate cuts, and, on the other hand, high hopes for AI. The latter is led by Nvidia (NVDA), whose shares continued their post-earnings trend, gaining 3% in premarket trading.

Investors are now firmly back on inflation watch, awaiting Friday’s release of the Federal Reserve’s preferred PCE gauge. Fed officials have issued a series of warnings that data must show a real slowdown in inflation to trigger a policy change, with Neel Kashkari the latest to join them.

Learn more: How does the labor market affect inflation?

Those comments, along with better-than-expected economic numbers and hawkish Fed minutes, prompted traders to scale back their bets on lower interest rates this year. Data researchers will receive updates later this week on first-quarter GDP and consumer confidence, which could prove catalysts.

Among other individual moves, shares of GameStop (GME) soared more than 20% in early trading. The gaming retailer said Friday it brought in nearly $1 billion from stock sales during the meme rally in early May. Meanwhile, Apple ( AAPL ) rose on data showing iPhone sales in China jumped more than 50% in April as retail partners cut prices.

Live4 updates

Tue May 28, 2024 at 10:08 a.m. EDT
Consumer confidence rebounds for the first time in 3 months
Consumer confidence rose unexpectedly in May.
The Conference Board’s latest index was 102, above 97.5 in April and higher than expected by the 96 economists surveyed by Bloomberg. The May figure ended three months of decline in the index.
“Consumers’ assessment of current economic conditions was slightly less positive than last month,” Conference Board chief economist Dana Peterson said in the release. “However, strong labor market conditions continued to strengthen consumers’ overall assessment of the current situation. Views of current labor market conditions improved in May, as fewer respondents said jobs were ‘hard to find’.”
Peterson added: “Fewer consumers expected future business conditions, job availability and income to deteriorate, leading to an increase in the expectations index. »
Tue May 28, 2024 at 9:32 a.m. EDT
The Dow Jones falls, the Nasdaq gains at the opening
U.S. stocks opened mixed on Tuesday, with technology a bright spot ahead of a critical inflation report due later this week.
The benchmark S&P 500 (^GSPC) climbed about 0.2%, while the tech-heavy Nasdaq Composite (^IXIC) added about 0.4% after strong closing gains Friday . The Dow Jones Industrial Average (^DJI) was the biggest laggard of the morning, falling 0.3%.
Tuesday, May 28, 2024 at 6:53 a.m. EDT
Foot Locker is not out of the woods
Foot Locker (FL) has had a horrible 12 months.
Poor financial performance has led to a surprisingly poor outlook, sending shares down 16% over the past year.
The Street is bracing for another dreadful quarter from the sneaker and sporting goods retailer in its report Thursday morning.
EvercoreISI analyst Michael Binetti said investors should expect a “very difficult quarter.” The company could warn again for the whole year.
He gives several reasons for this:
“In addition to pressured lower-income consumers, we believe key product launches like the Air Max DN have underperformed, and the recent Jordan 4 Industrial Blue is selling below MSRP in the resale channel ($185). $ versus $215 MSRP).”
Tuesday, May 28, 2024 at 6:47 a.m. EDT
EvercoreISI’s Take on Trump Tariffs 2.0
We’ve started to see Wall Street crunch the numbers on the economic impact of new tariffs that President Trump would like to implement if he wins a second term.
Today, EvercoreISI gives its opinion:
“Presidents rarely adopt or implement the entirety of a campaign idea and Trump in particular likes to use bold ideas as a starting point. Nevertheless, it is essential to understand what dramatic starting point Trump has advanced, because it has implications for the future, the combination of the proposed 10% general tariff and the 60% Chinese tariff would result in an overall weighted average U.S. tariff rate of nearly 17%, the highest. since the 1930s. On a static basis (i.e. without assuming dynamic economic effects), customs duties would increase from 0.3% of GDP to 1.9% of GDP, an increase of more than $400 billion per year.
Are markets underpricing a new Trump trade war? (EvercoreISI)