By Chuck Mikolaichak
NEW YORK (Reuters) – Highers edged higher and the Nasdaq fell after a volatile session on Tuesday as investors weighed inflation data and braced for quarterly earnings reports to bolster stock valuations and the strength of the U.S. economy.
The stock fluctuated between gains and losses throughout the day. Stocks got an initial boost from a report from the Labor Department that showed the producer price index rose less than expected in December, but the report failed to materially affect expectations for the likely path of the Federal Reserve’s monetary policy this year.
Investors awaited Wednesday’s consumer price index reading, which will further shape inflation and Fed expectations.
“There is an inherent level of uncertainty about where rates and the Fed are headed,” said Chris Fasciano, chief market strategist at Commonwealth Financial Network.
“Now we’ll see what tomorrow morning brings,” he said, referring to the CPI report.
It rose 221.16 points, or 0.52%, to 42,518.28, while the S&P 500 gained 6.69 points, or 0.11%, to 5,842.91 and lost 43.71 points. , that is, by 0.23%, to 19,044.39.
According to LSEG data, the market is pricing in about 29 basis points in a Fed rate cut by the end of 2025, with expectations for a cut of at least 25 bps not expected to rise more than 50% before the June meeting.
Adding to investor caution, US Treasury yields remained elevated, with the benchmark 10-year Treasury yield at 4.784%, hitting a 14-month high on Monday.
Quarterly earnings begin on Wednesday with results from the big banks, which are expected to report stronger earnings, boosted by strong deals and trading. The S&P 500 bank index advanced.
Shares of Goldman Sachs gained 1.52% ahead of earnings results scheduled for Wednesday and helped keep the Dow in positive territory.
The benchmark S&P 500 is trading at valuations well above its long-term historical average, and a disappointing earnings season could threaten further gains for stocks.
Health care was the worst performer among the S&P’s 11 major sectors, down 0.94% as Eli Lilly (NYSE: below.
Kansas City Fed President Jeff Schmidt said the impact of Trump’s policies was an “active conversation” at the central bank and that it would react if its inflation or employment targets drifted off course.
After rallying after the US election, stocks have struggled recently, with the S&P 500 falling over the previous five weeks as a sluggish economy, painful inflation and comments from Fed policymakers raised concerns about less aggressive central bank interest rate cuts. than previously expected.
Concerns about potential tariffs from the Trump administration, which would further increase inflation, also persisted.
Boeing (NYSE: ) fell 2.08% after the planemaker’s annual deliveries in 2024 fell to their lowest level since the pandemic.
Advanced issues outnumbered decliners by a ratio of 2.81 to 1 on the NYSE and 1.39 to 1 on the Nasdaq.
The S&P 500 posted eight new 52-week highs and six new lows, while the Nasdaq Composite posted 36 new highs and 132 new lows.
Volume on US exchanges totaled 13.58 billion shares, compared to the 20-day average of 15.72 billion.